As the UK gears up for the election of the new Prime Minister, we look at the potential implications on GBP, based on the result of the current candidates:
If Boris Johnson is elected:
- Johnson is a Brexit hardliner, but he can be prone to U-turns on policy.
- Should Johnson be elected, it would initially be a negative for GBP as he has committed to leave by 31st October - ‘deal or no deal’.
If Michael Gove is elected:
- Gove is more moderate than Johnson, and he has indicated he may seek an extension past 31st October.
- GBP unlikely to fall much below current levels and could potentially move higher as he is more likely to pursue a deal.
If Dominic Raab is elected:
- Raab is a Brexit hardliner, and he has even indicated he would close-down parliament to get through a ‘no deal’ Brexit.
- Raab's election would be a negative for GBP with the currency likely to fall to levels last seen post referendum.
If Jeremy Hunt is elected:
- A remain cabinet minister who is more likely to seek a deal and potentially extend.
- GBP could move higher from current levels.
If Sajid Javid is elected:
- Javid is a Remain cabinet minister, and he is unlikely to go for a ‘no deal’ Brexit. He has potential to pursue an extension beyond October 31st.
- Under Javid's leadership, GBP could move higher from current levels.
As we have witnessed over the past 3 years nothing to do with Brexit is straight forward. Labour today are tabling a cross party motion to stop a future Prime Minister pushing through a ‘no deal’ Brexit against the wishes of MP’s, if successful could make some of the hard line candidates reassess some of their more aggressive leadership promises.
Irrespective of the result in the coming weeks GBP is likely to become volatile over the summer as the deadline to leave gets ever closer.
It will soon become clear if the promises the new Prime Minister has promised are realistic, and if they are not, the country could be looking at another General Election, and the GBP could fall further, as more uncertainty would grip the country.
During times of uncertainty, you should always look to protect yourself against unfavorable changes in the foreign exchange rate. We can be your eyes and ears in the market, with a range of currency tools to help you monitor market movements.
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