The British pound fell by 0.5% against the US dollar, approaching a two-year low, while investors were watching the news about who could become the new prime minister of the UK.
Boris Johnson formally resigned as leader of the Conservative Party on Thursday, but said he would stay in Downing Street until a successor is chosen. His resignation coincides with a particularly dangerous period for the UK economy: the CPI rose to a new 40-year high and the risks of recession increased. Along with the global pressures of supply chain problems and the war in Ukraine, the UK is also dealing with the trade and economic fallout from Brexit.
Economists believe that the new Prime minister will have to take serious measures that can mitigate the risks of recession, but worsen the inflationary situation. At the same time, Johnson's successor is likely to provide more financial support and less strained relations with the European Union.
In addition to the news about the next prime minister, market participants will also pay attention to the UK data this week: reports on GDP, industrial production and the trade balance for May will be released on Wednesday. If the GDP data indicate that the economy stagnated in May, this will strengthen expectations of an economic downturn in the second quarter.