Round 1 to Boris

14 June, 2019

Tamim Rahman

The former foreign secretary Boris Johnson comfortably topped the poll as expected, securing the support of 114 of his Tory colleagues – well above the 105 he would need to guarantee a place in the final two. Johnson and another six candidates – Jeremy Hunt, Michael Gove, Dominic Raab, Sajid Javid, Matt Hancock, and Rory Stewart – remain in the contest, but there is speculation that some of them might withdraw before the next round of voting, due on Tuesday next week. So while Mr Johnson has made it, it is far from clear who will emerge to face him in the final.

The market has appeared to have fully digested the prospects of Boris Johnson assuming the office of Prime Minister at the end of July. Furthermore this along with the stronger-than-forecast labor market data out on Tuesday which showed wages are growing at their fastest rate since 2008 contributed to this week’s nascent recovery in Sterling.

On other news European finance chiefs want to strengthen the euro to rival major tender including the US dollar as a dominant world currency, the European Commission has stated. They want to bolster the international use of the single currency and have called on the central bank to get behind their efforts. European Central Bank policymakers this week said they were open to cutting policy rate again if economic growth weakens in the rest of the year and a strong euro hurts a bloc already bearing the brunt of a global trade war hence the nearly 2 cents increase between euro to dollar.

Things are as unpredictable as it has been this year so far and things are about to get even more unpredictability meaning more uncertainty for the exchange rates especially with the leadership contest, with the market being so sensitive it’s worthwhile speaking to your currency manager to stay ahead of the game to avoid any potential losses particularly if you have a large overseas payment to make in the near future.