In the shadows over the last month rumors have been emerging that a vote of no confidence against Theresa May was on the horizon and this morning Sir Graham Brady of the 1922 Committee has confirmed that 48 letters have been submitted, which will now lead to a leadership contest.
First things first a vote will take place between 6-8pm this evening and the votes will be counted shortly after. The question I will be asked throughout the day is what next and how this could impact sterling v euro exchange rates?
It’s important to note that 48 letters equates to only 15% of the Conservative Party and for her to be ousted over 50% of Conservative MPs will need to vote against her. For Theresa May to win she will need 158 Tory MPs and in my opinion I expect she will receive 158 votes. However if its the case she receives close to 158 that means a large proportion of her Party don’t back her, therefore could her resignation follow?
Sterling has fallen considerably against the euro in recent weeks and I expect this trend to continue throughout the week, even if Theresa May remains Prime Minister for the time being. My reasoning is that the EU have made it clear there will be no further concessions therefore it’s unclear how she will get the vote from the Commons in January.
This morning Theresa May has fired back and made it clear she will fight this vote of no confidence with everything she has got, which has given the pound a small boost against the euro. The reason why the pound hasn’t plummeted in my opinion is because of the falls we have seen in the last couple of weeks and the market had already priced in that a vote of no confidence was on the horizon.
Short term, euro buyer should seriously consider their position within the market. At present it’s very difficult to see how the pound is going to recover. If Theresa May is ousted this will present further uncertainty and therefore I expect GBP/EUR exchange rates to fall.
If you are planning a GBP/EUR transfer in the upcoming weeks, I would recommend getting in touch with me to discuss your situation. You can send me a message directly using the form below and I will respond to you personally: