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New PM won’t upset UK markets
Boris Johnson’s appointment as Britain’s next prime minister won’t have a huge impact on domestic or international markets, according to a global financial advisory CEO.
New PM won’t upset UK markets
Boris Johnson’s appointment as Britain’s next prime minister won’t have a huge impact on domestic or international markets, according to a global financial advisory CEO.
In predicting the prime ministerial outcome, the chief executive and founder of deVere Group, Nigel Green, said that the change to the leadership means “it can be expected that there will be a knee-jerk reaction for the pound to the downside on the announcement that Boris Johnson has won the keys to Number 10”, but that this outcome has been largely priced into the pound in recent times.
It was announced late yesterday that Mr Johnson had become the leader of the in-power Conservative Party, and would as a result, be sworn in as the nation’s newest prime minister.
“Boris Johnson has been the clear favourite in this leadership race since the beginning,” Mr Green said.
“As such, the markets have been pricing in the immediate impact on sterling of the Johnson administration,” he continued, adding that as any change is expected and priced in, “it will not drop too much further or for too long”.
For investors, a bigger issue facing the pound is the possibility of no-deal Brexit by the 31 October deadline.
This would mean the country would leave the European Union without concluding a withdrawal agreement. Both the UK and the European Union have an exit deal in place but are struggling to get approval through parliament.
Mr Green commented that the Brexit chaos and uncertainty have had an impact on the British pound.
It has also “been driven by fears regarding Mr Johnson’s embrace of the possibility of a no-deal Brexit on 31 October, with many forecasting an economic shock for Britain if this were to occur”, he noted.
“However, there’s also an argument to suggest that Mr Johnson’s controversial ‘do or die’ approach – and a hard break – will at least end the years of failed negotiations which have fuelled endless uncertainty for business and the markets,” the CEO continued.
“A quicker and cleaner exit from the EU could indeed deliver an unexpected boost for the pound as international and domestic investors get the clarity they crave before stepping off the sidelines and investing into the UK.”
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