For the third consecutive day, the pound has fallen yet again.
The pound was pulled down by a firm dollar, while concerns rise that the new prime minister will force Britain to leave the EU with no agreement in place.
The results of the Conservative Party’s leadership election will take place today, with Boris Johnson as favourite to win.
The winner of the election will become Britain’s new prime minister tomorrow.
Should Boris Johnson succeed, he has declared that Britain will leave the EU by October 31st, regardless if there is a transitional arrangement in place – a decision that has spread panic across the country.
Investors will be sitting on the edge of their seats to watch the scenes of London unfold, including the number of ministers who will resign if Johnson wins.
Johnson’s decision has taken the pound 2% lower against the dollar this month. And since he is the favourite to win, any change in the pound’s value is seen as unlikely, since the focus will be on the new prime minister’s opening speech.
Mizuho strategist Colin Asher, says:
News of Johnson becoming the next prime minister is unlikely to move sterling. Markets will be looking to see how much he is genuinely prepared for no-deal Brexit. He has said it’s “do or die” but the question is, how reliable is that promise?
We are in
sortof a phoney war period, he can get on with Brexit preparations but the real action will happen when parliament reconvenes after the summer break.
The surge in value has seen investors cut back on sterling positioning, with short positions growing to a 10-month high in the latest week, which is based on Commodity Futures Trading Commission data.
The pound fell 0.5% versus the dollar to $1.2418 GBP=D3, heading back towards recent two-year lows of $1.2382. Meanwhile, it fell to 0.2% at 90.045 pence EURGBP=D3, against the euro.