After a very busy day yesterday we are now down to the final two members. With Javid having dropped off at lunchtime yesterday the markets then focused on who would be the final two.
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With Johnson now battling against Hunt it appears that Johnson is the clear favourite, so as long we get don’t get any nasty surprises I think it will be Boris who is announced as the new Prime Minister this time next month.
The remaining two MPs will now compete to curry favour with the Conservative Party members of which there are approximately 160,000. The result is due to take place in the week commencing the 22nd July so there could be some movement in sterling exchange rates during the course of the next month.
Both candidates have differing opinions concerning Brexit and Johnson has been adamant that the UK will leave the European Union by the end of October. However, as we have seen a number of times during his political career he has ended up changing his decision so will the UK leave the EU by the end of October.
With the chances of a no-deal Brexit being talked up if Boris takes charge this is keeping the pound under pressure at the moment. Therefore, if you’re planning to make an exchange involving sterling it may be worth considering your options in the near future.
The Bank of England once again held interest rates steady at 0.75%. The vote was unanimous as the Bank confirmed that any tightening of monetary policy would be gradual and done at a ‘limited pace’. The Central Bank went on to say that downside risks to growth have increased since last month. The pound fell against a number of different currencies immediately following the announcement. The Bank has also cut the second quarter’s UK growth forecast from 0.2% to 0%. According to the statement the ‘underlying economic growth in UK appears to have weakened slightly in the first half of 2019.’ They also confirmed that ‘market forward pricing for bank rate has fallen markedly, driven by global growth risks and rise in perceived likelihood of no-deal Brexit.’
Later today the Bank of England will release its Quarterly Bulletin for the second quarter and this statement will be similar to that made at yesterday’s press conference, it may see a small drop in the value of the pound.
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