Volatility in GBP as PM Johnson survives
Tuesday 7 June, 2022
Daily Currency UpdateYesterday, UK Prime Minister Boris Johnson survived the vote of no confidence triggered by 54 Tory backbenchers. He survived by a much narrower margin than anticipated, with 148 members of his own party voting to remove him from his position. There was plenty of volatility in the wake of the no-confidence vote being announced, and this continued after the results were announced yesterday evening and into this morning’s session. The pound initially rose, suggesting that the markets may have seen the ousting of the PM as a positive for the UK. The pound then fell after it was announced that the PM would not be pushed out. This fall likely reflects the negative mood surrounding the Conservative party at the moment, which appears to be very divided in their views. GBP/USD is down around 0.4% for the day, sitting at 1.2480.
Key MoversElsewhere, the key story for the day was widespread US dollar strength. In particular, it broke its high in May against the yen, touching its best levels since 2002. The data calendar for the US is very thin for the remainder of the week, up until the release of inflation figures for May on Friday.
Against the dollar, the euro was pushed lower yesterday and is now back under the 1.07 handle, sitting around 1.0655. This was mainly due to the pickup in strength for the US dollar over the past few days. Investors may choose to hold off from making any moves on the euro until we hear what the European Central Bank have to say at their meeting on Thursday.
- GBP/USD: 1.2430 - 1.2540 ▼
- GBP/EUR: 1.1650 - 1.1745 ▲
- GBP/AUD: 1.7305 - 1.7460 ▲
- EUR/USD: 1.0630 - 1.0720 ▼