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Forex News: Pound Firms As Boris Johnson To Become U.K.

Pound Firms As Boris Johnson To Become U.K. PM

07/24/2019 - 09:07:00 (RTTNews)

(RTTNews) - The pound spiked higher against its major counterparts in the European session on Wednesday, as Boris Johnson is set to become U.K. Prime Minister following his victory in the Tory leadership race by a large margin.

Johnson will be sworn in after outgoing PM Theresa May submits her resignation to Queen at Buckingham Palace.

After taking charge, Johnson will start forming his team who are prepared to serve in a more pro-Brexit direction.

While Foreign Office minister Sir Alan Duncan and Education Minister Anne Milton had resigned over Johnson's plans, finance minister Philip Hammond and justice minister David Gauke are expected to quit soon.

The new PM will make his initial speech later in the day, laying out his vision about the future for a post-Brexit UK.

Johnson has repeatedly pledged to get Brexit done on October 31 and if the bloc refuses to negotiate a new Brexit deal, he has insisted to leave without a deal.

Market participants have been pricing in the possibility of Johnson beating Conservative rival Jeremy Hunt, giving the pound a brief reprieve.

The currency was trading mixed against its major opponents in the Asian session. While it rose against the greenback and the franc, it held steady against the euro and the yen.

The pound appreciated to a 9-day high of 135.28 against the yen, from a 6-day low of 134.25 seen at 3:30 am ET. Should the pound rises further, 136.5 is likely seen as its next resistance level.

Final data from the Cabinet Office showed that Japan's leading index eased more-than-estimated to the lowest level in six-and-a-half years in May.

The leading index, which measures the future economic activity, fell to 94.9 in May from 95.9 in April. The initial score for May was 95.2.

The U.K. currency strengthened to a 5-day high of 1.2522 against the greenback from Tuesday's closing value of 1.2439. The pound is likely to face resistance around the 1.27 level, if it appreciates again.

The pound rallied to a 5-day high of 1.2335 against the franc, compared to 1.2253 hit late New York Tuesday. Next immediate resistance for the pound is possibly seen around the 1.25 region.

The pound climbed to 0.8906 against the euro, its biggest since June 21. At yesterday's close, the pair was worth 0.8963. The pound is seen finding resistance around the 0.88 level.

Data from the European Central Bank showed that Eurozone's broad money supply growth slowed more-than-expected in June, while private sector lending rose unexpectedly at a faster pace.

M3, a broad money aggregate, rose 4.5 percent year-on-year following a 4.8 percent increase in May. Economists had expected 4.6 percent growth.

Looking ahead, Markit's flash manufacturing PMI for July and U.S. new home sales for June will be released in the New York session.

For comments and feedback: contact editorial@rttnews.com

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