Boris Johnson Resigns as Prime Minister, What Next?

[MongiIG]

Jul 7, 2022 | DailyFX
Justin McQueen, Strategist

BORIS JOHNSON, GBP/USD, ANALYSIS AND NEWS

• Boris Johnson Resigns, Will Serve Until New Leader is in Place
• Timeline of Leadership Contest to be Announced Next Week
• UK Assets See Muted Response as Macro Outlook Remains Key

Boris Johnson confirms that he will step down as Prime Minister following a wave of resignations within his party. Noting that he will serve as a caretaker PMI until a new leader is in place.

Thus far, much like how financial markets responded to Theresa May's resignation in 2019, aside from short-term noisy price action, market moves have been muted in UK assets, given that Boris Johnson's resignation does little to alter the overarching bleak macroeconomic backdrop that the UK currently faces.

British Pound Latest – UK PM Boris Johnson is Set to Resign, GBP Unfazed

WHAT NEXT?

Boris Johnson stated that the next steps for finding a new leader will be announced next week. Using 2019 as a guide, the leadership contest had been a six-week affair.

2019 TORY LEADERSHIP CONTEST TIMELINE

13th June: First votes of the leadership contest will take place. For candidates to proceed to the next round they will need to receive at least 16 votes. If all candidates meet the 16-vote threshold, the MPs with the least votes will be removed.

16th June: Channel 4 will host the first televised debate among the Tory candidates.

18th June: The second vote will take place where the threshold for progressing rises to 32 votes. The candidates will also be invited to a live debate on the BBC.

19-20th June: Up to four more rounds of voting will be held over the 2-days until there are just two remaining candidates left.

22nd June: The beginning of voting among the 160,000 Conservative members to decide who is the winner.

22nd July: The date at which the next PM is expected to be announced.

Most likely Next Conservative Leader, according to UK bookmakers

Source: SMARKETS