Yesterday, Prime Minister Boris Johnson unveiled his new cabinet, appointing former Home Secretary Sajid Javid to Chancellor of the Exchequer and giving leading Brexiteers key roles in government. More than half of Theresa May’s old cabinet, including leadership rival Jeremy Hunt, quit or were sacked. This movement in the government has had a positive effect on the Pound, with the Pound-to-Euro exchange rate reaching a July high over the course of the past 24 hours.
A particularly strong day of gains witnessed on Wednesday took Sterling to its best rate of exchange for those buying Euros since 21 June. On the current trajectory, the GBP/EUR exchange rate will have finally snapped an 11-week losing streak if it closes around current levels on Friday.
The FTSE is also up, but so are its German and French counterparts. However, most analysts have come to the conclusion that while Boris Johnson’s appointment has bolstered the UK market slightly, this is because someone is in Number 10, rather than the ‘Boris effect.’
Ana Bencic, President and Founder of NextHash, has commented on the price of the pound recently: “As the threat of a ‘no-deal’ Brexit increased over the few weeks before a new Prime Minister was appointed, particularly as Boris Johnson edged closer to power, some UK and international investors began to move wealth away from the UK, with fears of a knock-on effect of the pound. In fact, the last 24 hours have proved fruitful for the Pound and the FTSE100, but many attribute this to a newfound period of stability, rather than the personality of a new Prime Minister or the makeup of the cabinet. With these political events having so much of an impact on the markets and the exchange rate, many investors and traders may look towards other, decentralised options, as the UK leaves the European Union. Investors thrive on confidence and stability, and as volatility is almost certain to continue the nearer to the 31st October, we may see more investors moving away from traditional, centralised options.”