Pound hit as Johnson’s future in doubt and markets brace for months of uncertainty – business live | Business


Good morning, and welcome to our rolling coverage of business, the world economy, the financial markets, and the cost of living crisis.

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UK stock markets are expected to stage a cautious recovery today after their worst single-day performance in three weeks yesterday amid recession fears, as investors brace for months of political uncertainty.

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Boris Johnson’s premiership is hanging by a thread, after the chancellor, the health secretary and a string of Conservative aides dramatically quit last night, dealing a crushing blow to his authority following a slew of self-inflicted scandals.

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After Sajid Javid, the health secretary, and Rishi Sunak, the chancellor, both resigned, they were replaced by Steve Barclay and Nadhim Zahawi (previously education secretary) respectively. And Michelle Donelan has become the new education secretary.

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Stock futures suggest the FTSE 100 index could rise more than 1% when London opens, a partial recovery from yesterday’s 2.9% tumble.

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The political drama added to the selling pressure on the pound. Sterling already struggled yesterday amid recession fears, and is currently trading at a two-year low of $1.19, down 0.3% on the day. The dollar, seen as a safer currency, as benefited.

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Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says:

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The political turmoil in the UK certainly added to the selling pressure on the sterling, however the reason why cable slipped below the 1.20 mark was a booming US dollar, across the board.

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Stock markets in London and across Europe were hit by rising worries about a European recession yesterday, and the euro slumped to a two-decade low, as a jump in natural gas prices intensified the strain on the European economy. European futures point at a positive start this morning, but gains remain fragile.

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We have taken a look at the favourites to succeed Johnson as prime minister.

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And here is what other papers say:

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Meanwhile, Bank of England deputy governor Jon Cunliffe has said that the central bank “will act” to ensure that the recent surge in inflation does not become embedded in the economy. He told BBC radio this morning:

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It’s our job to make sure that as this inflationary shock passes through the economy we don’t find that leaves with inflation being the new normal, the sort of embedded psychology. We will act to make sure that doesn’t happen.

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The Agenda

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  • 8.30am BST: Eurozone S&P Global construction PMI for June
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  • 9.10am BST: Bank of England’s chief economist Huw Pill speaks
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  • 9.30am BST: UK S&P Global/CIPS Construction PMI for June (forecast: 55)
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  • 10am BST: Eurozone retail sales for May
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  • 1.30pm BST: Bank of England deputy governor Jon Cunliffe speaks
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  • 2.45pm BST: US S&P Global composite and services PMIs final for June
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  • 3pm BST: US ISM Non-Manufacturing PMI for June (forecast: 54.3)
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