The United Kingdom of Great Britain and Northern Ireland have a new Minister. The ruling Conservative party has decided that the former Foreign Minister, Boris Johnson, will lead the party, and as a consequence he has become the British Prime Minister. However, the protracted government crisis in the United Kingdom in relation to Brexit has caused investors’ concerns regards the British pound, which continues to fall.
According to analysts and financial strategists, the question of the UK’s departure from the European Union for the past three years has led to a long-term fall in the British pound (GBP) exchange rate. On 23 July, 2019, at 8:17 am CET, the British pound fell against the US dollar (USD) by – 0.18% of the exchange rate to US$ 1.2452 per GBP. At the same time a similar situation occurred against the single European currency Euro (EUR), when on the Forex market the currency pair traded at the rate of GBP 0.8984 per EUR with the current daily decline of GBP by – 0.03% against the EUR.
As already mentioned the UK has discovered who their new Prime Minister is, with voting in the British Conservative Party having ended on Monday, 22 July, 2019. The vote on the UK’s new leader came after former Prime Minister Theresa May announced that she would resign after a repeated parliamentary rejection of the Brexit agreement she negotiated with the EU.
The fight for the Conservative Party leadership in the UK had mostly focused on how each candidate would deal with Brexit before the UK’s new exit date, which is set for 31 October, 2019. As a co-author and current proponent of Brexit, Mr. Johnson has already caused a stir by saying that the United Kingdom must leave the EU “come what may”, “do or die”, even if that means leaving without agreement. In the initial referendum in 2016, his opponent, Jeremy Hunt was also for the exit and even a loud supporter of Brexit. However, he also recently said that no deal exit would be the “last resort”. Many traders and investors inside and outside the UK consider a no-deal Brexit a “cliff edge” scenario that the UK must avoid at all costs.
These and other facts are causing chaos in relation to Brexit. The UK’s exit from the EU has also, according to world banks’ economists, led to a decline in the UK gross domestic product (GDP) growth. The British pound has also steadily lost value to other currencies, and especially to the US dollar, with the fall representing roughly 4 percent of its exchange value just in the last three months. “We think the UK is almost uninvestable until we have much better clarity about what’s going to happen going forward, ” said Paul Gambles, co-founder of MBMG, adding that even the GBP 1.20 per USD might not be the lowest exchange value unless something changes dramatically.