Sterling (GBP) Price, Chart and Analysis:
- Conservative leadership race will dominate Sterling this week.
- If Brexiteer Boris Johnson is elected, how will the EU react?
Boris Johnson Remains the Clear Favorite to Become the New UK PM
Voting will close today at 16.00 GMT after weeks of hustings to decide who will be the Conservative Party leader, and Prime Minister, with the result expected to be announced on Tuesday. Boris Johnson is said to have an unassailable lead over rival Jeremy Hunt, and if the polls are correct, Johnson will take over at Number 10 after current PM Theresa May resigns on Wednesday.
Ahead of a possible Johnson leadership, Foreign Office Minister Sir Alan Duncan has resigned, and he is likely to be follower by around eight more senior Conservatives including Chancellor Philip Hammond and Justice Secretary David Gauke, who all say that they will not serve in a Johnson-led government.
The European Union (EU) will be watching events unfold closely ahead of talks with the next UK PM over the current Brexit impasse. Johnson has said that he will take the UK out of the EU on the October 31 deadline, deal or no deal, while Jeremy Hunt said that he is open to an extension to get the right Brexit deal agreed. As the deadline nears, Sterling will likely come under increased selling pressure, especially if no middle ground has been found between the two sides and a no-deal Brexit becomes increasingly likely.
Keep up to date with all key economic data and event releases via the DailyFX Economic Calendar
GBPUSD Daily Price Chart (December 2018 – July 22, 2019)
Retail traders are 75.8% net-long GBPUSD according to the latest IG Client Sentiment Data, a bullish contrarian indicator. However recent daily and weekly positional changes give us a stronger bearish contrarian trading bias.