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Theresa May’s announcement that she will resign on 7 June is no surprise but with Boris Johnson seen as the front runner to take over then it makes no-deal more likely, but this is not yet priced into the pound, says Seema Shah, senior global Investment strategist at Principal Global Investors.
“At $1.27 against the dollar, sterling has weakened in recent weeks, reflecting the repricing of Brexit risk as Theresa May’s time as PM draws inexorably to a close.
"Are we pricing in a no deal Brexit at these levels? No, the market is simply indicating that the risks of a no deal Brexit have increased.
"Were that nightmare scenario to unfold, sterling closer to parity against the dollar should be expected."
