Pound lower as Boris Johnson set to be announced PM
Tuesday 23 July, 2019
Daily Currency UpdateGBP - British PoundGBP/USD is heading back to last week's lows ahead of Boris Johnson's likely confirmation as the UK's next Prime Minister. Around 160,000 Conservative Party members have been voting by postal ballot over the past few weeks to find Theresa May's successor and barring a huge upset BoJo looks set to be anointed at around 11:45am this morning. His appointment to the top job is priced into sterling and most bookmakers have stopped taking bets on him taking up residence in 10 Downing St. Members of the 1922 Committee are due to announce the voting results and shortly afterwards the victor will make a speech. Its likely this speech is what will cause the most pound volatility. Johnson has promised to take the UK out of the EU deal or no-deal by the 31st October however he is likely to inherit all the problems faced by his predecessor in exiting the bloc. It should be noted that if there is a massive surprise and Jeremy Hunt wins the vote then sterling will likely take a pretty sizable leg higher as it raises the possibility of another Brexit extension allowing more time for a general election or even another referendum. GBP/USD currently trades around 1.2445 with GBP/EUR at 1.1120.
Key MoversThe dollar remains well bid this morning as expectations of action by policy makers at the European Central Bank continue to build. The ECB's next interest rate decision is due Thursday lunchtime and although action is unlikely this time round it is expected we could see ECB chief, Mario Draghi signal more stimulus measures to be confirmed at its September meeting. EUR/USD has slipped under 1.12 during the Asian session. Data-wise things kick off tomorrow with the monthly PMI numbers from the Eurozone with the main area of focus likely to be the German Manufacturing number which has been woeful of late. From the States, Friday's Advance Q2 GDP number will be of key interest to policy makers at the Federal Open Market Committee. An annualised reduction from 3.1% to 1.8% is predicted as global trade tensions start to hit the world's largest economy. Should the print fall short of expectations then this will raise the possibility of a 50bp cut from the Fed at its July 31st interest rate decision. As tensions with Iran cool a little and expectations of easing from the worlds two largest central banks, stock markets around the world are all currently in the green. USD/JPY is back above the 108 handle as a result.
- GBP/USD: 1.23 - 1.2590 ▼
- GBP/EUR: 1.1030 - 1.1220 ▼
- GBP/AUD: 1.76 - 1.7825 ▼
- GBP/NZD: 1.8370 - 1.8575 ▲
- GBP/CAD: 1.6260 - 1.6420 ▲