Financial markets appeared unperturbed by the political shock waves following the announcement that Britain’s prime minister, Boris Johnson, would face a no-confidence vote in his leadership.
By midmorning on Monday, the pound was rising against the dollar and other major currencies, while the FTSE 100, Britain’s benchmark stock index, also climbed higher. But with betting odds pointing to Mr. Johnson’s survival, market moves are more likely to reflect global concerns about the war in Ukraine and efforts by central banks to rein in inflation.
Samuel Tombs, the chief U.K. economist at Pantheon Macroeconomics, wrote in a note to clients that the pound’s appreciation was modest. But either way the vote goes, he said, the announcement has been received favorably because markets tend to like Conservative governments and the party’s chance of winning the next election could be higher under a new leader.
The pound is 0.6 percent stronger against the U.S. dollar and 0.4 percent higher against the euro. This follows the recent trend as some strength has been sapped from the U.S. currency. In the past three and a half weeks, the pound has risen 3 percent against the dollar.
The FTSE 100 is up 1.1 percent on Monday, rising alongside most European indexes with futures indicating the S&P 500 will open about 1 percent higher. There was no sign of investors seeking haven assets, such as government bonds, as their prices fell.
Overall, Mr. Tombs added, the result of the no-confidence vote “won’t have a large bearing on the near-term economic outlook,” in part because the chancellor, Rishi Sunak, recently announced a multibillion-pound spending plan to help households with inflationary pressures on their finances and soaring energy bills.