- Posted by currencies in Bank of England, Bremain, Brexit, Budget, Currency, Dollar, Economy, EUR, GBP, Inflation, Phillip Hammond, Prime Minister, Sterling, UK, Uncategorised
- July 23, 2019
- No Comments
The dollar edged to a two-week high versus its rivals this morning after U.S. President Donald Trump and congressional leaders reached a deal on Monday on a two-year extension of the debt limit, dousing fears of a government default later this year.
The dollar’s gains were capped in a broadly rangebound currency market as investors waited for the outcome of policy meetings at the European Central Bank and the U.S. Federal Reserve in the coming days.
While the ECB is widely expected to signal a dovish policy stance at Thursday’s meeting, the Fed is expected to cut interest rates by a quarter point next week.
The pound was the other notable loser in early London trading with the British currency sliding toward the mid $1.24 ahead of the results of the Conservative Party leadership contest. Boris Johnson is widely expected to win and replace Prime Minister Theresa May.
He is expected to be elected leader of Britain’s governing Conservative Party and the country’s next prime minister on Tuesday, tasked with following through on his “do or die” pledge to deliver Brexit in just over three months’ time.
Johnson and his rival, Foreign Secretary Jeremy Hunt, have spent the last month crisscrossing the country seeking to win over the less than 200,000 Conservative Party members who will choose Britain’s new leader.
Voting closed at 1600 GMT on Monday and the result is due to be announced this morning. The winner will formally take over as prime minister on Wednesday afternoon, succeeding Theresa May, who stepped down over her failure to get parliament to ratify her Brexit deal.
Johnson, a former London mayor who resigned as foreign minister a year ago over May’s Brexit plans, is the clear favourite to replace her, with several polls putting him on around 70 percent.
He is expected to start preparing for a no deal exit from the EU, we expect the markets will react to this in a negative manner in the lead up to October 31t deadline.