The market is confident now
The good news for Theresa May is that she might survive a leadership challenge.
Counts of support for May from Conservative members of parliament show that a majority have said they will support her. The vote is secret so while they say she's the right leader in public, many surely have been promised a better profile from the many potential leadership candidates. For now, however, the market is saying she will win.
The intriguing question is on what happens next if May wins. The first important detail is 'by how much'? Many of the stories propping up the pound today not that she has support of a bare majority of her party's MPs. That could ensure a victory but is a bare majority enough?
Sky Deputy Political Editor Beth Rigby thinks it will be.
Cabinet source also tells me that No 10 would think a vote of 165 in support would be good number (that's what she got in the 1st leadership round). Sort of suggests though that well over 100 MPs might vote against. Source: "a win's a win"
There might be pressure to step down if she wins with a slim majority but she doesn't have to. The party would probably be just as divided with someone else at the helm.
Importantly, if she wins, party rules say she can't be challenged again for a year. That's a key detail but it could be good and bad.
The problem is that May said she had expected to lose the Brexit vote this week handily and it's tough to see enough MPs changing their votes, even if she wins. So ultimately she could secure her place, but her place might be a quagmire.
For now the trade will be on her survival but I don't think a rebound in cable can last long if she survives.
At the moment, GBP/USD is rising above some resistance from yesterday's European high:
