Sterling has been under pressure this last week after suffering its longest ever losing streak against the euro since the creation of the single currency. This morning the pound was hovering around opening levels and was at €1.1316 as markets waited anxiously for Mrs May to reveal when she will stand down as leader of the Conservative party. In a speech made after meeting the leader of the 1922 Committee, Sir Graham Brady, the Prime Minister announced she will stand down on June 7. The news sent the pound climbing, with Sterling trading as high as €1.1357 against the euro and $1.2705 versus the US dollar.
But by 3.02pm, the pound had cooled to €1.1311 and $1.1.2674.
In an emotional speech outside No 10, Mrs May broke down in tears as maintained she had “done my best” to deliver a Brexit deal.
She said: “I have striven to make the UK a country that works not just for a privileged few but for everyone and to honour the result of the EU referendum.”
Mrs May, her voice cracking, concluded her speech saying: “I will shortly leave the job that it has been the honour of my life to hold.
“The second female prime minister, but certainly not the last.
“I do so with no ill will, but with enormous and enduring gratitude to have had the opportunity to serve the country I love.”
Mrs May said that the process of electing her successor would begin the week after she finally stepped down as Conservative leader.
She said that she had informed the Queen that she would continue to serve as Prime Minister until that process was complete.
Jamie Johnson, CEO of FJP Investment, said: “Uncertainty does not bode well when it comes to implementing a financial strategy, and for nearly three years, investors have been left in the dark with little guidance from the government.
“Now, with Theresa May’s resignation, we will no doubt see some movement in financial markets as they react to this news.
“However, this is not a cause for concern, as there could be greater long-term benefits of today’s announcement.”
He continued: “Once the markets have adjusted to the news, the government has the opportunity to use the leadership contest as a means of delivering greater certainty over Brexit.
“By knowing just what options are on the table, investors will be in a better position to effectively plan for the future.
“This means appointing a leader who can unify the Tory party and provide the leadership and guidance the country is currently calling for.”
Foreign Secretary Jeremy Hunt previously said he expected Mrs May to still be Prime Minister when US President Donald Trump visits the UK on June 3.
In response to a question following a speech at the National Cyber Security Centre, he said: “Theresa May will be Prime Minister to welcome him and rightly so.”
Rehan Ansari, Head of FX Risk Management at Caxton, said: “Theresa May confirmed in an address to the nation that she will step down on the 7th June 2019 and following this news the pound rallied even further to 1.2710.
“However, with more uncertainty in the market now and the failure to hold above 1.2700 or break above the first resistance level of 1.2720 the pound has given back its gains and fallen back towards the day’s lows at 1.2665 against the US dollar.”
Ian Strafford Taylor, CEO of currency expert FairFX said: “Theresa May’s announcement that she will step down as Conservative party leader as of 7th June, sparking the search for a new Prime Minister and bringing further uncertainty for the future of the UK and for the pound as the indecision over Brexit rumbles on.”
“The referendum result back in June 2016 marked the start of a rollercoaster journey for the pound, which has failed to return to its pre-Brexit rates since the decision to leave the EU was announced.
“This may be the end of Theresa May’s journey as Prime Minister, but unfortunately we are no closer to knowing how the Brexit journey will end.
“Over the last three years, the lack of any concrete plans around Brexit has left the pound vulnerable to volatility.”
“Economic and political uncertainty creates negativity and can cause a drop in confidence in the market, meaning that the pound can decrease in value accordingly.
“Analysts will be keeping a close eye on the reaction to today’s announcement, along with confidence and sentiment.
“The market will be looking at the strength of any new Prime Minister and potential political allies for the UK and the implications these could have on the economy.
“All that is certain is that the pound will continue to react to news.
“The pound is currently down 13 percent compared to the day of the referendum back in June 2016.”