The fate of the country is still in the balance as the leadership contests continues. Five out of the six of the remaining contenders took part in Channel 4's TV debate last night, Boris was the only candidate not to take part arguing that debates with several candidates "can be slightly cacophonous". However, he is choosing to take part in the debate on Tuesday, after the next vote has taken place.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR2.22%€5,085
GBPUSD2.72%$7,028
GBPCAD3.45%CAD $12,000

The three main candidates for the Tory leadership are Michael Gove, Jeremy Hunt and the front runner Boris Johnson, each holding different views on how to deliver Brexit. Mr Hunt stated that the EU "would be willing to renegotiate" a Brexit deal, adding "they want to solve the problem". This may be the case, but with the government due to break for summer recess, the government is not leaving much time for any negotiations with EU or even their own government.

Is the UK headed for recession?

The driver for the pound through Brexit is to a degree held on the shoulders of the potential new PM Boris Johnson as, the markets view his plans as the likely forecast. However, given that Johnson is not looking to extend Article 50 and is also ready to leave the EU on October 31st with or without a deal, fears of a no-deal split held investors. This may have already been factored in the price of the pound with him being the likely outcome to become the next Prime Minister.

Seemingly the consequences of a prolonged Brexit process on consumer spending and corporate investment threaten to slow the economy. As recent GDP data has shown the UK economy contracted slightly in April as the strong start to the year unwound. Considering the robust UK economy has been one area of support for sterling, any further losses in the UK’s economic momentum could weigh on the currency over coming months.

BoE Mark Carney speech

On Thursday the Bank of England (BoE) are due to make their interest rate decision, which is expected to stay the same at 0.75% amidst the fears of the continuing Brexit saga with the leadership contest. What is more interesting for the pound and its forecast is the minutes and Mark Carney Speech to potentially give hits of when the next rate hike will happen, along with the Brexit impact.

UK data to continue pound weakness

On Wednesday there is set to be a few important bits of data. Being CPI inflation data for the month of May, as well as Producer Price Index and retail price index, all set to have an expected drop by 0.1% YoY. This may not have a large impact on the markets as the overruling factor is still Brexit and the direction the new PM will take the country. So if you have a requirement for moving pounds in the in next few months I would strongly suggest making your account manager awareto remain informed of the latest update.

News

Read more articles

 

Download our monthly currency forecast

Download here

 

Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.