After an anxious few weeks, Boris Johnson has finally been announced as the new Prime Minister. He will become the 77th Prime Minister and this will be the first time in history that the leader has been voted by 160,000 Tory members rather than just MPs.
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Effectively, this means that just 0.4% of the British public have decided the future of the country. One of the major stumbling blocks that Johnson faces is that he will not hold a majority in the House of Commons owing to the previous agreement with the DUP.
We are now just 100 days from when the UK is again due to leave the European Union and Johnson has been a huge advocate in having the deal done prior to this date. However, he has also hinted that he may favour a ‘no deal’ Brexit in order to break the impasse.
This could be seen as one of the main reasons for sterling’s problems against a number of different currencies. We are now close to a 2 year interbank rate low against the US dollar and close to the lowest point during 2019 to buy euros.
Johnson will formally take over this afternoon following Theresa Mays’s final PM questions. He will be officially sworn in by the Queen and then be driven to Downing Street.
In the meantime, Andy Haldane, the chief economist of the Bank of England has spoken out against Brexit. He has claimed that the Brexit deadlock has undermined efforts to increase the UK economy. He went on to say ‘in the absence of Brexit, might more have been done? Perhaps.’
Haldane has suggested that a no deal Brexit could cause a deep recession. As Boris Johnson has still not yet confirmed what he will do over the 31st October deadline a no deal Brexit does still remain a possibility. This is could be one of the major sterling is having such problems at the moment.
With little data due out in the UK this week the markets may remain focused on the political situation so you may wish to prepare to move quickly if you have an upcoming requirement.
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