Pound LIVE: GBP rallies against dollar
and euro as Boris Johnson named new Prime Minister
THE pound has rallied
this morning against the dollar and euro as Boris Johnson is named as the new
Prime Minister.
PUBLISHED: 12:16, Tue, Jul 23, 2019 | UPDATED: 13:10,
Tue, Jul 23, 2019
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The Brexiteer fought off Jeremy Hunt with
nearly 50,000 more votes than his rival to secure victory in the Tory leader
contest. The pound had dipped this morning at about 8am, but has rallied as
traders banked on a Boris certainty. By midday the pound had regained losses
and was looking stable at 1.2460 dollars compared to 1.2474 dollars at the
previous close. The euro at 12pm was 0.8976 pounds compared to 0.8988 pounds at
the previous close.
Ed Conway, economic editor at Sky News said:
“Not much currency market reaction.
"Over the last few weeks pound has
weakened a lot. It’s improved a little over the last week. But today just a
little blip. No-one is panicking, everyone is waiting for policies.”
Sterling had fallen for the third straight
day, as the dollar firmed.
Despite fears about no deal, markets have not
been shaken by Mr Johnson’s win, expecting the result.
Mr Johnson attracted 92,153 votes from Tory
members, while Mr Hunt received just 46,656 votes.
Pound exchange rate
against euro over the last 12 hours (Image: PA•XE)
Jeremy Hunt and Boris
Johnson shake hands after Mr Johnson named the new Prime Minister (Image: PA)
Mr Johnson has declared that Britain will
leave the EU on the latest Octover 31 Brexit deadline even if no transitional
arrangements are in place.
Investors will be watching closely to see how
many ministers unhappy with a Johnson government will resign, as well as the
make-up of his cabinet.
Two junior ministers have already quit over
Johnson's plans, and finance minister Philip Hammond and justice minister David
Gauke have both said they plan to resign before they are sacked.
Johnson's belligerent tone has taken sterling
2% lower against the dollar this month, and it has depreciated in 11 weeks out
of the past 12.
But with Johnson the overwhelming favourite to
win the contest, a big sterling move after the announcement was never expected,
with greater focus on the new prime minister's first speech in office and
cabinet appointees.
A timeline of previous
Prime Ministers (Image: EXPRESS)
The pound exchange
rate against the euro from 11.30pm last night to 11.30am today (Image: XE)
Boris Johnson giving
his winning speech (Image: PA)
The pound stabilised today after weeks of
dropping as markets worry about a no deal Brexit, Craig Erlam, senior market
analyst at OANDA said
He said: “The initial response to the
announcement has been rather subdued given the build-up to the event but then,
it was so widely expected and heavily backed that it's perhaps no surprise.
“Johnson comfortably led from the outset and
clearly appealed more to the Tory membership when it comes to Brexit which is
why few people ever gave Hunt a chance.
“The question now is whether the pound can
recover from its slump in the near-term or whether the risk of no-deal is just
too great and every passing week is seen to take us one week closer to the
cliff-edge.”
Mizuho strategist Colin Asher
said: "News of Johnson becoming the next prime minister is unlikely
to move sterling. Markets will be looking to see how much he is genuinely
prepared for no-deal Brexit. He has said it's "do or die" but the
question is, how reliable is that promise?"
"We are in sort of a phoney war period,
he can get on with Brexit preparations but the real action will happen when
parliament reconvenes after the summer break."
Options markets appear to be relatively calm,
though overnight implied sterling volatility has risen to a one-month high
around 8.3 vols.
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