Pound Drops as Under Fire PM Boris Johnson Axis Goes
(Bloomberg) – The British pound maintained its decline on Wednesday. There has been speculation about the future of Prime Minister Boris Johnson amid a wave of departures from the government’s top ranks and eroding party confidence in his leadership.
Minister Michael Gove is to be fired by the Premier
The pound was down 0.2% at $1.1922 on the news that the premier’s ouster of Prime Minister Michael Gove. It remains above the day’s low. However, it fell to as low as $1.1876 earlier in the session. This level was last seen in early 2020 amid the turmoil of the pandemic.
Gove, a party veteran who was in charge of the housing portfolio. had previously called on Johnson to resign and would be the latest senior figure to leave the government. The move follows the departure of finance chief Rishi Sunak, health secretary Sajid Javid and a team of other government members.
Political turmoil is putting pressure on the pound
The latest political upheaval is putting pressure on the pound. Which is plague by concerns that UK interest rate hikes will continue to trigger monetary tightening in the US and other countries. Because Britain faces huge economic risks in the coming months.
Sterling is down 12% against the US dollar
This mix of domestic and global issues has caused the sterling to fall 12% against the US dollar so far this year, and a growing number of market participants expect the UK currency to drop to $1.10. Which last seen in 1985.
The UK currency has been under pressure since late 2021 and is currently trading near its weakest level since the start of the pandemic. For Viraj Patel, macro strategist at Vanda Research, the loss of two key cabinet members “adds to Britain’s political uncertainty and policy impasse.”
Bullish bets on the ROI and the Swiss franc versus the pound
“The GBP is not really a currency that we will touch on now – neither from a fundamental, policy and now political perspective,” Patel said, adding that he would bet bullish on the euro and the Swiss franc versus the pound.