The pound fell sharply against the Swiss franc today.
Fears of a no-deal Brexit drove GBP/CHF down to 1.224 earlier this morning; while a new prime minister is due to take office in the UK tomorrow.
And the outlook is certainly turning bleak, as traders increase their bets on a no-deal Brexit before the upcoming election results are unveiled.
Boris Johnson is the favourite to win the stewardship of the Conservative Party, which in turn will make him the country’s prime minister. Johnson has repeatedly claimed that a no-deal Brexit is better than no Brexit at all, and the markets appear to be reacting nervously to his impending reign in Downing Street.
The Chancellor of the current government, Philip Hammond, announced his resignation ahead of the expected Johnson victory. Citing differences in policy, Hammond said:
It’s very important that the prime minister is able to have a chancellor who is closely aligned with him in terms of policy and I
thereforeintend to resign to Theresa May before she goes to the palace to tender her own resignation on Wednesday.
A lack of major UK economic data this week means that Brexit jitters will likely rule over GBP prices, unless some unexpectedly good news is learned from a speech tomorrow by the Bank of England’s Chief Economist, Andrew Haldane.
Sterling traders are advised that GBP may fluctuate following the end of the leadership contest, while many analysts expect downward pressure on GBP to continue if, as expected, Boris Johnson prevails.