The United Kingdom country-specific ETF strengthened Friday as the Brexit process came to a standstill and U.K. Prime Minister Theresa May stepped down in response.
The iShares MSCI United Kingdom ETF (NYSEArca: EWU), the largest U.K.-related exchange traded fund listed in the U.S., was up 1.0% on Friday and bounced off its long-term support at the 200-day simple moving average.
Theresa May stated she will quit as the British prime minister once her Conservative Party picked out a successor, potentially opening the way for a new leader to put up a no-deal departure from the European Union, the Wall Street Journal reports.
The likelihood of the U.K. leaving the European Union without an agreement to ease economic disruptions diminished earlier this year after British lawmakers evinced their opposition to a no-deal Brexit. However, a new prime minister could try to override their the push back and bring U.K. out of the E.U. without a deal, which has many business leaders concerned.
May announced her resignation after failing to repeatedly to push through a satisfactory Brexit divorce agreement she negotiated with the E.U. The Conservative party will officially begin looking for a replacement after May steps down on June 7, and the new PM will probably only take over in July.
“It is now clear to me that it is in the best interest of the country for a new prime minister to lead that effort” to complete Brexit, May said during a statement on the steps of 10 Downing Street.
“To succeed, he or she will have to find consensus in Parliament where I have not,” she said of the next leader.
European officials anticipate a no-deal exit is more likely after May’s departure and expect any new prime minister to face an uphill battle on renegotiating a deal.
“A new prime minister must work to avert a messy and disorderly exit from the EU,” Adam Marshall, director general of the British Chambers of Commerce, said.
Investors remain concerned about the economic shock of a no-deal Brexit and the political risk associated with an early election that could bring the socialist Labour Party to power.
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