- The UK now has a new Prime Minister, Chancellor and Cabinet and soon they will have a new Bank of England Governor, budget and Brexit plan.
- Despite this, FX vols are near historical lows once again.
- Who are the contenders and what are the deadlines for the rest of the year?
The early focus of the new Prime Minister
It's still early days but the initial moves from the new Prime Minister would likely be as follows:
- The summer talks with the EU: A whistle-stop tour of EU capitals and Brussels will be needed by the new leader if they are serious about avoiding a no-deal Brexit. If a deal is struck, parliament may even need to be recalled early.
- The potential for a vote of no confidence in the House of Commons: There may be early expectations that the Labour party announces a vote of no confidence while parliament is sitting. But this is unlikely so early on and Labour will probably wait until no-deal risks are high enough to be able to convince Conservative MPs to abstain or vote against their own government.
- Appointment of the new BoE Governor and autumn budget: It is too early at this stage to be discussing the precise date of the autumn budget, but the market may start to price in fiscal loosening. Any discussion of the new BoE governor would also be of market interest.
For the full report please read Trading the UK with a new PM.