In the coming days, markets may probe and call the bluff on Boris Johnson's threat to crash Britain out of the EU, setting up a full-blown currency crisis well before the Brexit deadline he has set to get out with or without a transition deal by Halloween.
The fall of Theresa May pushed sterling slightly higher, but only after the currency had fallen sharply in the past week on the prospect her probable successor, hard Brexiteer Boris Johnson would drive Britain out of the EU without a deal.
Sterling steadied after initially posting further large losses on UK political fears but shares in Europe and the US were hit as the fallout of the US-China trade war extended to Chinese champion Huawei and the world’s chip makers for mobile phones.
The US and eurozone economies remain a world apart and growth data due in the coming days will only highlight the widening gap, suggesting that monetary policy will continue to move in opposing directions on the two sides of the Atlantic.
Across the eurozone, political leaders are entering a state of paralysis: Citizens want to remain in the EU, but they also want an end to austerity and the return of prosperity. So long as Germany tells them they can’t have both, there can be only one outcome: More pain, more suffering, more unemployment, and even slower growth, writes.
Today’s defenders of the European status quo must fight against both Trump’s hostility and against the likes of Matteo Salvini and Luigi di Maio, the rising stars of Italian politics, who see the disintegration of the euro as a boon to their campaign, writes