Pound Fluctuates as Race to Be Next U.K. Premier Takes Shape

Boris Johnson: Next U.K. Prime Minister 'Cannot Be Me'
  • Boris Johnson rules himself out; sterling briefly extends gain
  • U.K. currency is 10% weaker versus dollar since Brexit vote

The pound swung between gains and losses as the race to be the next U.K. Conservative Party leader -- and therefore prime minister -- started to take shape.

Sterling briefly extended an advance against the dollar after former London Mayor Boris Johnson unexpectedly ruled himself out of the process, leading to expectations of a smoother transition from David Cameron. Other government ministers who said Thursday they’d run include Johnson’s former Brexit ally Michael Gove and Home Secretary Theresa May.

“Johnson’s announcement removed one layer of uncertainty from a very difficult political situation,” said Jane Foley, a senior currency strategist at Rabobank International in London. “That makes it more likely that May will get support.”

The pound strengthened 0.2 percent to 82.69 pence per euro as of 1:10 p.m. London time. It was little changed at $1.3427 after tumbling the most on record on June 24 after Britain voted to leave the European Union. The result of the referendum a day earlier prompted Cameron to announce his resignation.

The U.K. currency is 10 percent weaker versus the dollar since polls closed on June 23.

“Sterling will take the positive out of this, which is we now have a Conservative Party that will not be splitting at the seams,” Daragh Maher, New-York-based head of U.S. currency strategy at HSBC Holdings Plc, said in a Bloomberg Television interview.

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