In today’s update about when to buy Euros, we’ll look at how Boris Johnson has been appointed the new Prime minister of the UK. Since this announcement, the Pound to Euro exchange rate has hit fresh July highs, with peaks on the interbank rate of 1.1228 today at the time of writing this report.
Boris threatens to leave the EU with no deal
Boris has taken a hard-line stance with regards to Brexit, which has seen his popularity rise. Boris has stated that he would be happy for the UK to leave the European Union without a deal, come October 31st.
Most of the UK Parliament and the EU want to avoid a disorderly Brexit. For example, Portuguese Foreign Minister Augusto Santos Silva said today that: “We will listen carefully to what the new British government has to say, but our objective is to avoid a disorderly exit”.
UBS analysts estimate that the market is now pricing in a near 50% chance of a ‘no deal’ Brexit. This would explain the recent drop in Sterling against the Euro of nearly -5% in the last three months.
Conservative Party and Brexit Party to band together
There have been rumours that the Brexit Party would form an electoral pact with the Conservative Party, if a General Election were called. If this is the case, it would dramatically increase the chances of the Conservative Party winning with a healthy majority. This is because the Brexit Party would target Labour heartlands, where the public are incensed with Labour’s stance on Brexit.
Will Boris Johnson tone down his rhetoric surrounding a ‘no deal’ Brexit, as the new Prime Minister has to wrestle with the realities? If Boris continues along his hard-line Brexit stance, we could see the Pound drop further against the Euro. This is because this is seen as negative to the future of the UK economy, if no-deal happens. If Boris tones down is stance and seeks a new deal with the EU to get through Parliament, we could see the Pound rise, as a no-deal Brexit will become less likely.
If you are planning to exchange currencies in the near future, get in contact with an expert who will keep you up-to-date with political developments here in the UK and EU, as well as market movements. You can contact me, Oliver Godwin, directly here.