Shortly before I was on Bloomberg TV today, Leadsom withdrew from the Tory leadership context, leaving May, who favored remaining the EU, as the likely successor of Cameron. Leadsom had been trailing May even before her controversial weekend comments.   

Sterling shot up to almost $1.3020, and as was the case last week, there appeared to be a wall of sterling sellers lurking there. Sterling was trading below $1.29 when the news hit and has given back half of its spike gains to trade below $1.2940 as this note is penned.  

I reiterate my views that sterling is headed lower and the dollar, more broadly, can still rise. It is not just divergence of monetary policy, but also the respective health of the banking systems, and politics.Of course, US politics are their own circus, but even before the officials party confirmations, a Trump victory, which requires winning all the swing states, simply does not look very likely. Net-net, European politics appear to be more of an existential threat than US elections.

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