The UK Leadership Race, Brexit and the Economy Sink the Pound

The Pound is under pressure. Brexit, the leadership race and the UK economy have all contributed and there may be more pain to come…
Bob Mason

Boris Johnson and Jeremy Hunt had their last debate on Tuesday, this time round a live televised debate.

While Brexit had been the main area of focus leading into Tuesday’s debate, relations with the U.S President also became a topic of discussion.

The debate over Trump came in response to Trump’s attack on Theresa May, calling her foolish and also calling the ambassador a stupid guy…

Following the diplomatic leaks, the UK’s special relationship with the U.S is certainly being tested. With Brexit just around the corner, losing U.S support at such a critical time may be the straw that toppled the Tory Party…

One savior for Theresa May’s replacement could be if Nigel Farage takes Trump’s advice and replaces the UK Ambassador to the U.S. Farage may, however, have his eye on the prize, an eye on becoming the British PM.

The Televised Debate

On the issue of Trump’s response to the leaked documents, Johnson played it safe and decided to avoid saying whether he would keep the UK Ambassador on. He also held back from making any negative comments towards Trump’s reaction to the leaked documents.

Jeremy Hunt looked to corner Johnson on the 31st October Brexit deadline, pushing for Johnson to declare his willingness to resign should he fail to deliver Brexit by the deadline.

In spite of some personal attacks during the debate, the reality is that both candidates are willing to take Britain out of the EU without a deal.

Interestingly, however, Jeremy Hunt didn’t see the suspension of Parliament as an option to force a no-deal Brexit through. That suggests that Britain’s ongoing state of limbo would continue under Hunt. In contrast, Johnson said that he would leave all options on the table, supporting his assurance of a 31st October withdrawal.

The debate failed to bring up any major surprises, however. The lack of jaw-droppers left Johnson as the favorite to take number 10.

Brexit and the UK economy

The next leader of the Conservative Party and Prime Minister will be announced on 23rd July. That leaves very little time left until 31st October deadline.

Parliament’s summer recess begins on 25th July and MPs won’t return until 5th September. That will leave the next PM with just 8-weeks to deliver on Brexit.

Economic data out of the UK has already begun to sound the alarm bells. Today’s stats, which include GDP and production figures will be key. Will the BoE hold out until Brexit to begin providing support.

In the event of a no-deal, if the recent weakness in the stats is anything to go by, there’s likely to be a marked impact.

The BoE may need to cut rates sooner rather than later. That move may have to come prior to 31st October.

The Pound

It’s not been a stellar weak for the Pound. The Pound is down by  0.58% for the current week and by 1.95% for the current month. Brexit and economic indicators have been a drag and the leadership race hasn’t helped…

The UK’s BRC retail sales monitor numbers released on Tuesday tends to have a relatively muted impact on the Pound. A 1.6% slide in June, following a 3% slide in May contributed to the Pound’s slide this week. The Pound sits at its lowest level since 2017.

Sensitivity to the stats is likely to build in the coming months. If Tuesday’s figures are anything to go by, there may well be more pain ahead.

At the time of writing, the Pound was down by 0.09% to $1.24474.

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