The Pound recovered some terrain yesterday, following the appointment of Boris Johnson as the new British prime minister and the ensuing cabinet reshuffle. It is interesting to note that the new members of government are all prominent figures from the ‘Leave’ side. The measured Pound recovery is a reaction to greater certainty, as the new Prime minister showed decisiveness, through the appointment of ministers that will support his number one objective: taking the UK out of the European Union on October 31st.
Photo by Jaime Estevez.
Nevertheless, the markets will still look at a hard-Brexit scenario as the worst possible outcome for the British economy. At the same time the resistance to such an outcome is also likely to intensify, in parliament and even within the conservative party itself. Therefore, we can expect more Pound volatility ahead.