Sterling Tunes Into Boris Speech

Sterling Tunes Into Boris Speech

City Index  | Jun 12, 2019 13:33

Sterling buyers show their hand as Boris Johnson shows face

The bookies favourite to win the Conservative Party leadership contest has finally shown his face, after a notable stretch of deliberately avoiding public comment. Boris Johnson was, perhaps predictably, still light on detail about his merits compared to other candidates to succeed Theresa May as Prime Minister, particularly how he would succeed where she failed in getting a Brexit deal through a sceptical House of Commons. How much more getting it over the line in Brussels.

The stand out of a speech which was, admittedly delivered in the usual colour Bojo style, was an assertion that he is “not aiming for a no-deal Brexit”. The line was seized on by the press and flashed on the wires, even though it clearly doesn’t negate the position Johnson aimed to make a unique selling point just before campaigning got underway: that he would be prepared to leave the EU by the 31st October deadline with no-deal if necessary.

Despite the lack of illuminating content revealed during his press conference though, purposeful sterling traders also showed up for the first time in weeks, giving the pound against the dollar its first clear reaction to the contest yet. True, sterling has been on a fair run higher since marking a bottom on the $1.26 handle last week, but it unmistakeably extended gains to the highest since 7th June during Johnson’s comments. In other words a clear cohort of sterling bulls have revealed their hand. Up till this point the prevailing assumption had been that any political influence that brought the possibility of a no-deal Brexit nearer was anathema to the pound, due to the potentially corrosive impact on the economy. Now, perhaps, sterling’s perceived buy case is changing. The pound has flagged the upside in reaction to comments from the Tory candidate who had been synonymous with ‘crash-out’ risk. The reckoning that a possible resolution of similarly economically corrosive Brexit stalemate was bought.

More broadly, this week’s sterling tailwind may get a boost from U.S. inflation data due out shortly, if the prints are as lacklustre as recent top-tier economic readings Stateside.

Chart thoughts

A fresh uptick could enable GBP/USD to confirm Wednesday’s $1.2758 spike highs, though $1.27630 resistance from the June top still doesn’t appear a credible target. Keeping our view on the near horizon only, consolidation to Tuesday’s $1.2716 floor or even the lower $1.2693 low tested earlier that day, would be reasonable if upside progress falters.

Sterling/U.S. dollar – hourly

GBP/USD Hourly

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Original Post

City Index

Related Articles

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 中文 香港 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes