Boris is in, so what happens now?
24 July, 2019
Yesterday we saw Boris Johnson announced as the New Tory party leader after beating Jeremy Hunt by almost a 2/3 majority of the vote. The Pound did not see any real huge swings – gaining between 30-50 pips against the EUR and USD, unsurprising perhaps given the odds of him winning and the market pricing this in. So what happens now for the UK and the Pound?
Later today Boris is expected to head to Downing street and take over from Theresa May after an audience with the Queen following his victory. However his tenure looks like it is doomed for disaster – he has no commons majority and there is no mandate from the general public as this election was only voted for by Tory party members. There are policy issues within his own party, and all the while the Brexit clock continues to tick down in the background. To add to this with a no-deal outcome previously rejected by parliament, it seems like there could be real trouble ahead with the notion of a general election in the coming months a very real and growing possibility.
Whilst some may suggest the Pound is already trading at crisis levels, the fact we only saw a marginal improvement in rates yesterday might be a signal for real concern. As we know Boris is playing a dangerous game by advocating for leaving without a deal if the EU will not bend, and the last time this was looking like a possibility GBP>EUR rates were almost 5% lower.
And should we find ourselves looking at a general election and the chance we could then have a Corbyn led labour government, this would equally spell real trouble for exchange rates. To some extent and in the short-term we may see a small recovery, now at least we have someone steering the ship, but the current backdrop is a particularly rocky one and it does feel inevitable that at some point there will be a crash.
Speak to your Currency broker today for some friendly guidance on how you can fix the rate now and mitigate the risk of any upcoming transfers you may have.
Are you backing Boris? Can you afford to take the risk?