Theresa May recently resigned as the leader of the Conservative party, and her tenure as British prime minister will soon be over. Various MPs are now competing to take her position. Ten candidates were announced on June 10th, but now only six are left.
Among them, several are strong supporters of Brexit, including three of the favorites to become PM at the end of July: Boris Johnson, Jeremy Hunt, and Michael Gove.
The probability of a Brexit without a divorce agreement is therefore increasing. Boris Johnson is the candidate most likely to move into 10 Downing Street, leaving the EU without a deal doesn’t seem to be an issue for him.
He is ready to reopen negotiations with Brussels, but is threatening not to pay the money the EU claims the UK owes, if the bloc refuses to budge on its positions. The amount of money at stake is estimated at between €45 billion and €50 billion, and represents all outstanding financial commitments of the UK towards the EU’s member states.
British Foreign Secretary Jeremy Hunt, says that the European Union is willing to renegotiate a Brexit deal after he had an informal chat with German Chancellor Angela Merkel. However, he didn’t specify whether he was talking about the legally binding exit agreement, or political declarations that could accompany it about future relations between the United Kingdom and the EU.
Trading the GBP/USD
Depending on the outcomes of Brexit and various international trade disputes, as well as impending monetary policy decisions from the Fed and the BoE, market participants will sell or buy the GBP or the USD according to their preferred scenarios, which could create strong price movements on the GBP/USD pair.
Most experts are confident about the long-term prospects of the GBP/USD pair, as they believe the British pound has already integrated the growing political and economic uncertainty of the situation into its price.
Leaders of major companies around the world are also confident and positive about the Brexit situation and its economic consequences. According to a survey by consulting firm KPMG, CEOs of large companies are planning to increase their investments in the United Kingdom after Brexit finally happens.
For this reason, the currency pair still has room to rise, especially after a sell-off period. On the other hand, the USD has strongly increased recently and is near its peak, which could put some downward pressure on the greenback.
Trading the GBP/USD pair could therefore be very profitable. This asset will likely provide great trading opportunities, so keep an eye on the economic calendar and on monetary policy decisions that could affect the value of the British pound and the US dollar.