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With Boris Johnson’s future as prime minister hanging in the balance following a flurry of resignations, including as chancellor and health secretary, the pound – already battered by recession fears – has come under more selling pressure. It fell to a new low of $1.877 today, the lowest since the early days of the pandemic, and is currently down 0.4% on the day at $1.1911, still below the $1.20 mark. Jordan Rochester, strategist at Japanese investment bank Nomura, now expects sterling to fall in the coming months to its lowest level since 1985 against the dollar. It targets $1.15 by the end of July and $1.10 by the end of September, compared to a previous target of $1.18. With the US becoming a key energy export partner for Europe, this leads to a major… trade shock in favor of the dollar. You can follow the latest developments on our political blog live here. The Institute for Supply Management’s latest report on the US services sector showed it expanded for a 25th straight month, albeit at a slightly slower pace. The headline index fell to 55.3 in June from 55.9 in May. Wall Street stocks are broadly flat. The euro was also hammered by worries about a recession and a crisis in energy supplies and edged closer to parity against the dollar, falling 0.9% to $1.0177. The European stock markets are rallying after yesterday’s recession. The FTSE 100 is ahead 103 points, or 1.4%, at 7,124, while Germany’s Dax rose 1.8%, France’s CAC 1.9% and Italy’s FTSE MiB rose 1.2%. Crude oil rebounded earlier in the day after plunging nearly 10% yesterday, but has reversed those gains and is trading lower. Brent crude is at $102.07 a barrel, down 0.7%, while US light oil has lost 1.1% to $98.36 a barrel. Our top stories today: Thanks for reading it. We will be back tomorrow. Take care! – JK Updated at 15.12 BST Wall Street opened broadly flat as investors awaited minutes from the Federal Reserve’s latest meeting, which was released at 7 p.m. BST. The Dow Jones opened 10 points lower at 30,957, while the S&P 500 rose less than a point and the Nasdaq gained 15 points. Even Michael Gove, one of the government’s most senior ministers, told Johnson he should resign, the Daily Mail’s deputy political editor reported. Boris Johnson could face another confidence vote within days as Tory caucus members will consider changing its rules as soon as Wednesday night, the Guardian understands, reports our chief political correspondent Jessica Elgott. Two executive members said it was possible the 1922 Commission would decide at an executive session Wednesday afternoon to change the rules to allow another vote. Johnson is protected under current rules by a year of immunity after winning a vote a month ago. What could the 1922 co-election mean for Boris Johnson? read more Boris Johnson’s press secretary insisted he would seek another vote of confidence if called for. Asked if the prime minister believed he would win it, she replied: “Yes.” In the latest on the cost of living crisis: Demand for debt services among Lloyds Bank customers has soared by 30% in the first six months of the year as the cost of living crisis takes its toll, reports my colleague Joanna Partridge. Amid a squeeze on living standards, research by the bank shows three-quarters of its 26 million UK customers were worried about rising prices and the impact it is having on their savings. Lloyds chief executive Charlie Nunn said customers were trying to control their finances by consolidating their debts. Nunn added that eight out of 10 of her customers have less than £500 in savings in their current and savings accounts. Lloyds Banking Group is the country’s largest mortgage lender and is often seen as a bellwether for the UK economy. The European Parliament has backed plans to label natural gas and nuclear power “green”, rejecting calls from Ukraine and climate activists that the proposals are a “gift to Putin”, reports Jennifer Rankin in Brussels. The vote was a “dark day for the climate”, a senior MEP said, while experts warned the EU had set a dangerous precedent for other countries. Nadhim Zahawi, the new Chancellor of the Exchequer, has called for a review of UK corporation tax policy in a clear hint that a rise from 19p to 25p expected next year could be reduced or scrapped, reports economics writer Phillip Inman . Zahawi, who took over on Tuesday afternoon after Rishi Sunak resigned, said he wanted to look at planned increases in corporation tax to ensure British companies remain competitive. And here is our profile of the second richest member of parliament. Our economist Richard Partington looked at the tightrope the new chancellor must walk. If he stays in the job longer than some political commentators expect, Nadhim Zahawi faces a balancing act as chancellor. He must walk a fine line between doing what it takes to prevent the political collapse of Boris Johnson’s government and dealing with the worst succession of economic shocks to hit Britain since at least the 1970s. As the fourth Conservative chancellor in as many years to be parachuted in after Rishi Sunak resigned as a sharp critic of Johnson’s tax-and-spend stance, Zahawi is expected to face heavy pressure from the prime minister to cut taxes for to revive the economy. Zahawi is the second-richest member of parliament after his predecessor, with an even more sophisticated business hinterland than Sunak. Amid the cost of living crisis, opponents are likely to pounce on his past as an oil industry executive who made millions from fossil fuels while an MP, as well as past ties to former Tory MP Geoffrey Archer and charging taxpayers the current for his stables. The new chancellor has an undisputed task to steer the economy out of recession and a persistent cost-of-living shock. Inflation is the highest since 1982 and is forecast to reach 11% in October, while the economy is expected to sink to the bottom of the global growth charts next year.
GSK shareholders vote on Haleon spinoff
Meanwhile, drugmaker GlaxoSmithKline’s shareholders will be asked to highlight its plan to spin off its consumer healthcare business, called Haleon, at a meeting starting in an hour. Haleon makes a number of well-known brands, including Sensodyne and Aquafresh toothpaste, as well as the pain and inflammation medications Panadol, Voltaren and Advil, along with heartburn pills Nexium and Chapstick. If the overhaul is approved as expected, GSK will spin off and list Haleon on the London Stock Exchange later this month, valuing it at around £45bn. Haleon shares are set to list and begin trading on Monday 18 July. GSK will then focus its remaining pharmaceuticals and vaccines business under chief executive Dame Emma Walmsley. She has come under pressure to improve the company’s performance from activist shareholder Elliott Advisors, a New York hedge fund, which has questioned her leadership. Updated at 13.50 BST
The pound sinks amid political turmoil
As political turmoil deepens, it’s no wonder the pound is sinking further. It is now down 0.6% at $1.1883. still the lowest level since the beginning of the pandemic, March 19, 2020. But the euro is also being hit by recession fears. It is nearing parity against the dollar, trading 0.8% lower at $1.0181. Updated at 13.22 BST Boris Johnson said during Prime Minister’s Questions: Hang on – that’s what I’m going to do. Boris Johnson believes he still has the support of a majority of Tory MPs, No 10 says The Prime Minister will challenge the confidence vote if one is called — John Stevens (@johnestevens) July 6, 2022 Updated at 13.09 BST Another resignation… Stuart Andrews has resigned as housing minister. It is with regret that I resign as Minister of Housing. I pay tribute to all fellow ministers, officials and civil servants in the Department and in the wider sector. I look forward to continuing to serve my constituents in Pudsey, Horsforth and Aireborough. pic.twitter.com/wTnrr9rcSu — Stuart Andrew (@StuartAndrew) July 6, 2022 Sterling hit a new two-year low, losing 0.5% to $1.1894, its lowest since March 2020. The deal is a big relief for Just Eat Takeaway, Europe’s biggest takeaway company, whose stock has fallen 70% this year. Shareholders have urged the company to sell or find a partner for Grubhub, which it acquired last year for $5.8 billion in stock. Updated at 13.03 BST
European Commission raids online food delivery companies
The European Commission has raided several online food and grocery delivery companies in two EU countries over concerns they may be part of a cartel, which could mean heavy fines for the businesses if found guilty of breaking competition laws. The EC, which acts as competition enforcer in the 27-nation bloc, did not name the companies. He said: The investigation concerns an alleged agreement or concerted practice to share national markets for the online ordering and delivery of groceries and other consumer goods in the European Union. Just Eat Takeaway, the largest online meal delivery company operating in the EU,…
