GBP/USD has been moving higher amid dollar weakness, amid concerns for PM Johnson. Various aspects of the leadership crisis may send sterling down again, NDDFX’s analyst Yohay Elam briefs.
“The most recent reports have suggested that Johnson is receiving oxygen but is not on a ventilator. Hopefully, Tuesday’s information is more reliable than Monday’s. Nevertheless, being in intensive care is worrying enough.”
“Any other leader would have less clout and would need to win over the trust of other ministers and civil servants while the country and the world are battling the coronavirus crisis.”
“Contrary to several countries on the continent, the UK’s peak may still be ahead.”
“Foreign Secretary Dominic Raab is now in charge of the government. He is a staunch supporter of a hard exit from the EU and may drive a harder exit, with less favorable trading terms for the UK.”
“Putting Brexit aside, Raab leans toward more fiscally conservative views. He may curb efforts to support workers and businesses and limit the pound’s recovery.”