By Geoffrey Smith
Investing.com -- The pound struggled to make headway and U.K. stocks continued to underperform their European peers on Friday amid fears of months of policy drift after Boris Johnson's resignation as Conservative Party leader on Thursday.
By 08:20 AM ET (1220 GMT), the GBP/USD was flat against the dollar at $1.2022 and against the GBP/EUR at 1.1832, while the FTSE 100 was the worst-performing major index in Europe, with a 0.6% decline, hurt also by a fresh sell-off in large-cap mining stocks.
Analysts have taken badly the suggestion - sketched out by Johnson in his resignation statement - that it will take nearly three months to appoint a new Prime Minister while the Conservative Party organizes a leadership election. In the meantime, Johnson will remain as PM, but U.K. media reports say he has promised colleagues not to take any radical policy decisions during that time.
Under current Conservative Party rules - which were used to appoint Johnson three years ago, the party's lawmakers in parliament will present the national membership either with a unanimous choice of their own, or, more likely a choice between two candidates from their ranks. However, it's likely that the process of whittling down the list of potential leaders will drag on through the summer.
There are few clear signs as to who the likely successor will be. Traditionally, neither the parliamentary party nor the membership takes kindly to the person most directly responsible for the downfall of the previous leader. Johnson, whose actions deposed both Theresa May and, before her, David Cameron, was an exception to this convention. But if the rule holds, that would appear to weaken the chance of Rishi Sunak and Sajid Javid, whose resignations from the Treasury and the Health Ministry on Tuesday triggered the final act of Johnson's leadership drama.
Accordingly, Sunak has slipped from his position as the early bookmakers' favorite to take over as PM, to be replaced by Defense Secretary Ben Wallace, whose profile has been helped by his eloquent and energetic support for Ukraine since its invasion by Russia in February. Penny Mordaunt, another former Defense Minister, has also been touted as a possible candidate, as has Tom Tugendhat, a veteran of the Iraq and Afghanistan wars who is popular with the party base, despite - or perhaps because of - not having held senior office.