The pound’s remarkable recovery against the euro and dollar was dented in part yesterday, as the UK Government revealed that Prime Minister Boris Johnson had been moved from his hospital bed into an intensive care unit.
As mentioned by Jack yesterday, the pound has started trading within a range as it awaits further flows into it from investors looking to take more risks – some in the market have begun comparing stock market health against sterling; when the indexes go up, so will the currency – or so the thinking goes. As with anything in the market or wider world at the moment, predictions and forecasts are impossible to generate at this time, so correlations like the above can be dropped quickly on unforeseen announcements such as the UK’s Prime Minister being admitted to intensive care.
Whilst sterling has recovered to return to its ranges on the euro and dollar as of this morning, the markets and country eagerly await news of Johnson’s condition, with a deterioration likely to knock GBP confidence if confirmed. Essentially, even though a Machiavellian power grab isn’t expected here if the PM is in hospital for a long period of time, a government without its majority winning leader is seen in the eyes of the market as being one that may stray from the path Boris has set, especially as Dominic Raab is given free rein.
Have a great day.
Author: Joshua Haden-Jones, Relationship Manager
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