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Alternative Market Briefing

The Boris effect: pound bounces but volatility ahead

Friday, July 26, 2019

B. G., Opalesque Geneva:

Despite the slight climb of the British pound and the FTSE100, analysts are bearish on the UK currency and economy going forward.

Boris Johnson, who was chosen as the new UK Prime Minister on 23 July, unveiled his new cabinet the next day, in which more than half of the members were replaced by Brexiteers. The new leadership had a positive effect on the British pound, which rebounded somewhat from its mid-month slump, but not from its highs earlier this year.

£1 was worth €1.12 on 25 July, compared to €1.10 on 18 July (and €1.17 on 5 May, the last peak, after reports emerged that former Prime Minister Theresa May and labour party leader Jeremy Corbyn would rush through a Brexit deal). And £1 bought $1.25, compared to $1.24 on 16 July (and $1.31 on 5 May).

The FTSE100 index was at 7,556 on 23 July compared to 7,493 on 18 July (and 6,734 on 2 January) but went down slightly afterward. Its German and French counterparts, the DAX and the CAC 40, also edged up slightly.

Parliament is on its Summer recess from 25 July to 3 September, and the UK is set to leave the European Union on 31 October.

Ana Bencic, president and founder of NextHash Group, a digital asset trading platform, believes the pound and the FTSE100 may have benefited from a newfound period of stability.

"As the threat of a 'no-deal' Brexit increased over the few weeks before a n......................

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