Boris Johnson wins Leadership contest to become next UK Prime Minister: How does this affect GBP/EUR rates?
The pound to euro exchange rate has managed to improve following the news news that Boris Johnson has become the 77th British Prime Minister. After weeks of not knowing who will lead the country we have seen the pound make some gains vs the single currency.
This has created some good short term opportunities for anyone looking to buy euros at the moment. However, I think the gains could be short lived as I think we could see some resignations coming this week. This could cause some instability politically and I think this could cause an issue for the pound.
100 days until Brexit: Will Boris manage to get a Brexit deal done?
We are now just less than 100 days before the Brexit deadline. So far Boris has still said he is open to a no deal Brexit. This has spooked investors as we are still in for a very uncertain next 3 months.
We could also potentially face an early general election. Typically, an election can often result in weakness for the currency involved. Johnson has ruled out one taking place before the end of October, but some MPs have suggested that they may be willing to trigger one. One of the major reasons why Johnson may hold an election would be to win more seats. This would make his job easier to pass new legislation and carry out Brexit. At the moment the Tories still rely on the DUP so an election at suitable time could help.
In my personal opinion I don’t think this will happen in the near future. However, for MPs to stop a no deal Brexit they would have to defeat the government. This would involve holding a vote of no confidence. This would then likely trigger a general election.
Euro news: ECB meeting this week
In the short term we have the European Central Bank meeting on Thursday. If the ECB hint that they may be looking at cutting interest rates or increase Quantitative Easing then this could see some problems for the Euro towards the end of the week.
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