Is Carney the sole adult in UK's political morass? – BBH

Research Team at BBH, notes that the Sterling is continuing to move lower and the news that has unhinged the market was that now two real estate funds have moved to suspend trading (and withdrawals).  

Key Quotes

“As the contagion grows, there may be some important implications for how central banks think about systemically important financial institutions and whether the world's largest asset managers could be included in the regulatory web.  

While we anticipated a political crisis if the UK voted to leave the EU, it seems to be even more profound.  It has become clear that the Leave advocates are as surprised and ill-prepared as nearly everyone else was.  Cameron's resignation was not a surprise, but Johnson's withdrawal was.  

The Labour Party is hardly in a position to capitalize on the Tory's woes.  While the UK Tory MPs are voting on Cameron successor, Labour MPs have made it clear in last week's vote that Corbyn does not have their support.  It is not clear that he ever did.  However, the feckless campaign to remain, coupled with the poor showing in the early May local elections, is splitting the party too.  The head of UKIP has been kept at an arm’s length by the Tories and has also stepped down.  

While the political class is in disarray, BOE Governor Carney has emerged as the "adult in the room."  He has now presented publicly three times since the referendum and his message is consistent.  The decision to leave the EU was a headwind before the actual vote, and the disruptive impact is likely to be serious.  

Cameron had initially suggested that a Brexit vote would nearly immediately trigger Article 50 of the Lisbon Treaty that governs an exit.  Then he changed his mind, deferring the decision to his replacement.  It was anticipated that Cameron's successor would not be selected until October.  That was moved up until early September.  However, several of the candidates have indicated no intention on triggering the divorce until next year.  

Now the plot has thickened again.  There is a constitutional issue of the role of parliament in invoking Article 50. The Bank of England seems to be among the only centers of power in the UK that had a game plan.  

The $1.30 level for sterling had psychological importance.  A break had spur calls for $1.25 on the way to $1.20.  Sterling depreciation feeds through into inflation considerable faster than it will boost the competitiveness of UK manufacturing exports.”