Sterling and stock market rise

Yesterday sterling and the stock market rose after the resignation of Mrs May made leaving without the Agreement a bit more likely. That’s a blow to those who think No deal is bad, or those who think markets mainly respond to the endless Brexit wrangles rather than more normal considerations about interest rates, growth etc

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52 Comments

  1. Mark B
    Posted May 25, 2019 at 6:35 am | Permalink

    Good morning.

    I do not always think it wise to associate these events as they are always open to re-interpretation. For example. One could argue that Sterling and the Stock Market rose because her successor would be more likely to get the WA through.

    Time will tell if Mrs.May leaving will be a blessing or a curse. Too many people associate our failure to Leave the EU with her when, as we have all witnessed, she had more than a little help, help that to this day, Remains ! 😉

    • Ginty
      Posted May 25, 2019 at 10:36 am | Permalink

      Agreed. Sir John’s point is that the BBC reports on Sterling when Brexit can be blamed.

  2. agricola
    Posted May 25, 2019 at 6:37 am | Permalink

    Being cynical of such institutes I would suggest they were first pushed down to produce a profit later. I transferred money last week and got a good Euro rate. How long before the CBI start complaining that the high rate due to EU exit is harming their profits. They are casinos, get used to it.

  3. oldwulf
    Posted May 25, 2019 at 6:41 am | Permalink

    The market realises that no deal is better than a bad deal.

    • Julie Dyson
      Posted May 25, 2019 at 10:45 am | Permalink

      Likewise, the market realises what Remoaners and most politicians still refuse to accept — that a successful, clean WTO Brexit is the only way out of this mess, and is therefore ultimately inevitable.

      The only real question is how long we will beat around the bush — and how much we must suffer in the process — before the inevitable occurs.

  4. jerry
    Posted May 25, 2019 at 6:43 am | Permalink

    Of course the events of yesterday also made not leaving at all quite a possibility, I do not believe the ERG influence is more that 50% of the parties MPs, I seem to remember you castigating ‘Remain’ once when they suggested that market moment (can’t remember if it was FX or stocks) supported their views.

    Que Sera, Sera…

    • libertarian
      Posted May 25, 2019 at 11:27 am | Permalink

      Jerry

      When will you ( and to be fair to you a huge number of the idiot politicians ) realise that its NOT what politicians want, its what a majority of voters want.

      We will be leaving in October, if not before

      • jerry
        Posted May 25, 2019 at 1:56 pm | Permalink

        @libertarian; Claim down…

        “its NOT what politicians want, its what a majority of voters want.”

        I do get it, but unfortunately we do not live in a Swiss style democracy, that is why I stick my head above the parapet on this site and actually call for a second referendum that would ask the people to chose between the WA and a WTO exit.

      • L Jones
        Posted May 25, 2019 at 2:25 pm | Permalink

        Right, Libertarian. The way in which these (remain) politicians spout on continually and gloomily that ”we may not leave the EU at all” – anyone would think it was in THEIR gift to deny us that for which a majority of us voted. Just because THEY don’t like it.

        We voted OUT. No qualification. Not ”Out – but only if we can stitch together some trade deal by using a bit of bribery”.

        • jerry
          Posted May 26, 2019 at 6:55 am | Permalink

          @L Jones; Not that circular argument again!

          Indeed we voted OUT. No qualification. Not “Out – and only on my terms”. Ho-hum…

          There were no qualifying options asked in June 2016 so please stop trying to claim a mandate was give for your pet Brexit plan, want to claim such a mandate best we have that “How should the United Kingdom Leave the European Union” referendum.

  5. James1
    Posted May 25, 2019 at 6:58 am | Permalink

    “Yesterday sterling and the stock market rose after the resignation of Mrs May made leaving without the Agreement a bit more likely……”

    So the Project Fear brigade proved wrong yet again. Well, gosh what an amazing shock. How could the Project Fear experts possibly be wrong about anything? Could it perhaps be that they are wrong about everything?

    • Bob
      Posted May 25, 2019 at 10:35 am | Permalink

      @James1

      “Could it perhaps be that they are wrong about everything?”

      Well, so far, they have.

  6. Richard1
    Posted May 25, 2019 at 7:01 am | Permalink

    Even the BBCs thought for the day carried an anti-Boris message. Continuity Remain are getting worried.

  7. Bryan Harris
    Posted May 25, 2019 at 7:11 am | Permalink

    Good news – our stocks have been depressed for too long, mainly due to a government lost in navel gazing, that has been doing nothing to make things better for the average household.

    With a new government, whose aims aligned with the needs of the country and a clear signal of where we were going, would see the stock market booming.

    We absolutely need a real right of centre government – nothing else will do.

  8. Noneoftheabove
    Posted May 25, 2019 at 7:13 am | Permalink

    Business is business!

    • Bob
      Posted May 25, 2019 at 10:43 am | Permalink

      “Business is business!”

      This is something that the Remainer can’t get their heads around. They think business is run by governments. I can understand why someone on the state payroll would have trouble understanding commerce. Children are not taught the concepts of trade because schools are obsessed with equality, diversity etc.

      • libertarian
        Posted May 25, 2019 at 11:32 am | Permalink

        Bob

        Nail on the head, thanks. I have repeatedly having to tell the remainers on here and elsewhere that business/trade is totally about people selling goods and services to other people .

        They think Germans will stop buying iPhones because we are in, out, EEA, EFTA or WTO , its deluded. The only effect government/political intervention has is on costs/pricing. If a government priced out popular products they would soon feel the force of their electorates

  9. Everhopeful
    Posted May 25, 2019 at 7:15 am | Permalink

    We have been fed so much rubbish regarding the economic consequences of “No Deal”.
    Currencies fluctuate all the time, yet left wing Remain media reports it as Brexit disaster and always in tones of accusatory, breathy terror!

  10. Peter Wood
    Posted May 25, 2019 at 7:18 am | Permalink

    Sir John,

    According to the news, you won’t have a new leader until end of July = one of the problems with the Tory Party!

    Come on, you could whittle the number down, in the PCP to 2 within a week, and go to the membership for a decision by end June. Stop wasting time.

    I presume the good news is that we’ll also say goodbye to Mr. Hammond?

    • agricola
      Posted May 25, 2019 at 10:02 am | Permalink

      Just look at how long it takes these cutting edge politicos just to vote. This says it all.

    • libertarian
      Posted May 25, 2019 at 11:34 am | Permalink

      Peter Wood

      Why hurry ? Parliament passed Article 50 , that says we leave at the end of a prescribed period , which is October. Doesn’t require any kind of deal, if we hit the date we either have to extend or leave. As long as we end up with a pro Brexit PM , the nearer to October the better in my book

      • Peter Wood
        Posted May 25, 2019 at 9:51 pm | Permalink

        Preparation for ‘no deal’.

  11. Richard1
    Posted May 25, 2019 at 7:25 am | Permalink

    Just listening to Matt Hancock on Today. He is wooden and rather incoherent and seems to be advocating bring back mrs may’s Deal with a few meaningless platitudes.

    The credible candidates are: Boris, Gove, Raab, Hunt, Javid

    The non-credible candidates (could they please each have a moment of reflection & self-awareness & withdraw) are: Leadsom, Hancock, Mordunt, mcVey. Unless for PC re has to be a woman candidate on the list I suppose.

    Stewart is quite coherent but also seems to be another continuity May candidate on Brexit.

    • agricola
      Posted May 25, 2019 at 10:05 am | Permalink

      Anyone who failed to leave May’s cabinet is not eligable to stand unless they enjoy masochistic failure.

    • L Jones
      Posted May 25, 2019 at 2:32 pm | Permalink

      Anyone who voted for May’s surrender treaty shouldn’t be eligible, if the Party has any sense of self-preservation left.
      If they voted for it even once (especially the last time) they must have thought it was a ”good thing”. If they DIDN’T think that, yet voted for it anyway – that simply shows how dishonourable and dishonest they are. Were they playing personal political games at such a hugely important time?

      Every one of the ‘front runners’ seems to be a half-hearted Brexiteer, through expediency one imagines. Only one other mentioned – Steve Baker- has been staunch and principled.

      • rose
        Posted May 25, 2019 at 10:31 pm | Permalink

        The last vote was different: Mrs May was colluding with Parliament to kill off Brexit and there was an honourable and amicable disagreement between the Brexiteers about how to deal with that. Some thought they could best salvage Brexit by leaving on the 29 March and then tear up the WA afterwards; others thought that impossible.

  12. Lindsay McDougall
    Posted May 25, 2019 at 7:50 am | Permalink

    The normal pattern has been that the FTSE goes up and sterling goes down whenever a No Deal Brexit looks more likely. That’s logical. We will have a couple of tough years while new export markets are being established. Sterling being low will help in that regard but in the longer term sterling has been oversold.

  13. Margaret
    Posted May 25, 2019 at 7:52 am | Permalink

    Emotions are important in the stock market.

  14. Fred H
    Posted May 25, 2019 at 7:54 am | Permalink

    I imagine after the clear result on Monday morning, ie a major win by BREXIT, the Market will rise. Plus if only she would announce a 2 week walking tour somewhere with no telecomms access, we might see a surge in well-being, only to be bettered by 100 Remainer MPs resigning. If only! Has Trump asked to address the H of C? A message that he supports a fresh start out of EU would be great.

    • agricola
      Posted May 25, 2019 at 10:11 am | Permalink

      I’m inclined to suggest the Eiger North Face but I am not that unkind. Crib Goch would be more appeopriate or maybe Striding Edge. Lets hope the weather is good enough to allow her to enjoy it for two weeks.

  15. Newmania
    Posted May 25, 2019 at 8:08 am | Permalink

    John, you should publish your daily currency predictions? No Deal more likely ..the Redwood prediction -pound to go up !
    Dear readers, bet on the precise reverse and a tidy sum will accrue over the year – simples
    (Pssst …..the pound has been on the longest losing streak takes place since creation of single currency reaching a four month low)
    What next ; pile into Diesel , scoop up High Street Retail ..baby needs a new pair of shoes !

    Reply Do try understanding what I am writing. My main point is Brexit rumours are not normally what move markets! I am attacking those who see every movement down in the pound as proof of a “bad” Brexit, as if the pound never went down before we voted!

    • Richard1
      Posted May 25, 2019 at 10:12 am | Permalink

      The largest depreciation of the pound took place after the great Labour bank bust and bailout. Imagine how much worse that bust would have been had we been in the euro!

      • Mark
        Posted May 25, 2019 at 11:14 am | Permalink

        The pound hit $1.03 in March 1985. I remember it flashing up on FXFX on my Reuters screen at work.

    • L Jones
      Posted May 25, 2019 at 2:35 pm | Permalink

      ”You can always tell a remainer – but you can’t tell ’em much.”

  16. Denis Cooper
    Posted May 25, 2019 at 8:11 am | Permalink

    I say again that there is a very big difference between the UK leaving the EU without any new agreement on anything whatsoever, for example not even on whether a UK officer at Dover is still allowed to talk to his French counterpart in Calais, and leaving the EU just without any special trade treaty to replace the current trade arrangements, defaulting to the existing WTO treaties but hopefully in a managed and co-operative way.

    According to the German Ifo institute the country which would take the biggest hit from the latter outcome would not be the UK but the Irish Republic:

    http://johnredwoodsdiary.com/2019/03/10/tuesdays-vote/#comment-1001867

    “That potential 8% economic hit is why the Irish government has been busy making a mountain out of a molehill on the Irish border, which Theresa May uses as a pretext to meet some of the demands of the CBI.”

    Theresa May sold the pass in her Mansion House speech of March 2nd 2018:

    http://johnredwoodsdiary.com/2018/05/28/social-care-and-the-nhs-2/#comment-937422

    when she gratuitously accepted responsibility for preventing the Irish government and the EU erecting some kind of Berlin wall on their side of the border, effectively allowing them to dictate terms to us, and the new Tory Prime Minister needs to repudiate that and make the Irish government think again about the absurd, extreme and intransigent position that they have adopted and persuaded the EU to support.

    • Tad Davison
      Posted May 25, 2019 at 11:33 am | Permalink

      That is one to keep an eye on, thanks Denis. If I get any responses to the points you made, I’ll keep you posted.

  17. formula57
    Posted May 25, 2019 at 8:18 am | Permalink

    Remoaners have made themselves absurd and incredible by viewing all news through the prism of their Brexit prejudices such that the common response is just to laugh at them.

  18. Steve
    Posted May 25, 2019 at 8:37 am | Permalink

    Yep, egg on a few faces.

  19. Dominic
    Posted May 25, 2019 at 8:38 am | Permalink

    I suspect her departure was ‘priced-in’. Let’s see how the market reacts to the new Tory leader. If the new leader sends out mixed signals about our EU membership I believe the market will suffer.

    We need certainty. That means making an official speech and telling the UK and its partners that we are leaving on WTO terms and as per the instructions delivered to government by the British electorate

    If the market reacts negatively to our leaving then tough. They react but as always the market find their natural level in accordance with changed circumstances

    It’s do or die for the Tories. You must make the correct choice of leader to save this country from Marxism and political slavery

  20. Peter
    Posted May 25, 2019 at 9:12 am | Permalink

    I would not read much in to the initial effect on the price of sterling or first reaction of the stock market.

    However, since Remain would do likewise in the hope of swaying opinion I can see why you mention it.

  21. ian wragg
    Posted May 25, 2019 at 9:17 am | Permalink

    Thanks John for your resolve against Merkels disgraceful WA. Your party has but one chance to redeem itself from the present implosion.
    As JRM stated recently May was the one who prevented us from leaving on 29th March by asking for an extension using the Royal Prerogative. She and only she is to blame.
    Whilst you still tolerate Hammond, Rudd and the likes in cabinet, support for TBP will continue to increase and come the next GE if we are still either full members or Colonial Status within the EU, your party will be history.

    • margaret howard
      Posted May 25, 2019 at 11:20 am | Permalink

      ian wragg

      “Thanks John for your resolve against Merkels disgraceful WA. ”

      Can you explain to us what Frau Merkel has to do with it? I thought we voted Brexit, not the Germans.

      Still indulging in the blame game?

      • Ian wragg
        Posted May 25, 2019 at 11:38 am | Permalink

        The WA was drafted between Brussels and Berlin.
        Check the syntax of the document and you may spot it.
        May was on the Brussels side of the table whilst non negotiations took place.

        • margaret howard
          Posted May 26, 2019 at 12:17 am | Permalink

          Ian wragg

          “Check the syntax of the document and you may spot it.”

          Not that old chestnut again about it having been written in German and translated into English (or the other way round)?

  22. Bernard Palmer
    Posted May 25, 2019 at 9:46 am | Permalink

    John. Maybe you should join Nigel on the Brexit Party tsunami wave before it hits the beach. Leave the Tories to Boris and then maybe the two/three of you could join together later and really fix everything.
    It would mean putting your board in the water now before the EU results are announced Sunday I guess. Big ask I know but give him a call. He could really use your help anyway. He’d be crazy not to accept.

  23. ukretired123
    Posted May 25, 2019 at 10:27 am | Permalink

    I agree with Sir John that Remainers cry wolf too often and point out examples to prove their dire warnings on Brexit, so post-May expected depression in markets but got the reverse!
    Just like Project Fear Mk 1 to 100…. Ad infinitum….
    Markets want certainty and May had everyone guessing for 3 years and some…

  24. margaret howard
    Posted May 25, 2019 at 11:17 am | Permalink

    JR

    “That’s a blow to those who think No deal is bad, or those who think markets mainly respond to the endless Brexit wrangles”
    ==

    Before the referendum the pound was worth €1.30, but now stands 15pc lower against the euro.

    Since its introduction the £ has lost about 40% of its value.

    (This is a shortened version of an earlier posting which got lost unfortunately)

    Reply Yes your previous chose highly selective dates so I deleted as misleading. If I choose other dates you get a different picture. E.g. Mid April 2016 pre vote $1.43 to £1 Mid April 2018 post vote $1.43 to £1 The pound has gone down and up both before and after the vote. Last few years have been ones of general dollar strength against all main currencies.
    Against the Euro we stood at Euro 1.08 in October 2009, below today’s level whilst firmly in the EU. Mid April 2016 pre vote 1.23 E to £1 Mid April 2017 after vote Euro 1.19 to £1. Again pound has gone up and down v Euro pre and post vote.

    • Fedupsoutherner
      Posted May 25, 2019 at 12:01 pm | Permalink

      Once again Margaret, you’re spouting hot air. Your own figures again?

  25. BillM
    Posted May 25, 2019 at 11:36 am | Permalink

    Such statistics will always be ignored by the die-hard Remainers. They are interested only in those that show the ‘stupid’ Leavers in a bad light, regardless of their authenticity.

  26. Mike Wilson
    Posted May 25, 2019 at 5:47 pm | Permalink

    Stock markets have a mind of their own. It is pointless trying to relate movements in the market with political events.

  27. Simon Coleman
    Posted May 25, 2019 at 8:11 pm | Permalink

    Almost all the evidence from the last 3 years indicates that the markets are happier to see a deal, rather than no deal. You’ll only get no deal via a general election, which could also lead to no Brexit (though that is unlikely). Whatever happened to that watertight legislation that was going to take us out on 29 March? Are you really that confident that your ridiculous plan is going to come to fruition on 31 October?

    • Edward2
      Posted May 26, 2019 at 7:08 am | Permalink

      A law trumps a motion so a no deal exit is possible.
      As long as there is a PM who actually wants to leave the EU backed by a Cabinet that share that view.
      The Withdrawal Agreement was not a deal.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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