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03 June 2023

Boris Johnson vows to 'get Brexit done' on 31 October


Boris Johnson vowed on Tuesday to "get Brexit done" by the twice-delayed October 31 deadline, after defeating Foreign Secretary Jeremy Hunt in the race to become next British premier.

"We're going to get Brexit done on October 31," Johnson said moments after being declared the winner of the Conservative party leadership race.

British pound dips as traders predict Boris Johnson victory

The pound dipped toward recent lows Tuesday, with arch-Brexiteer Boris Johnson set to win the race to become Britain's next prime minister.

Johnson, who has vowed to take Britain out of the European Union on the October 31 deadline with or without a deal, is widely forecast to beat rival Jeremy Hunt in the battle to become Conservative Party leader - and therefore prime minister. An announcement was due at about 1045 GMT.

Ahead of the news, sterling dipped to $1.2427 on fears of a dreaded "no-deal" split that severs trade ties abruptly. That was not too far from last week's two-year low of $1.2382.

The European single currency meanwhile rose to 90 pence. That compared with last week's peak of 90.51, which had been the highest level since mid-January.

'No photo finish'

"Sterling is trading in the red as we await the result of the Conservative leadership contest," Oanda analyst Craig Erlam told AFP.

"Traders are clearly not expecting a photo finish in this particular race and despite the pound having been hit heavily in recent months at the prospect of a Johnson victory, they clearly see opportunity for a little bit more.

"We have not yet breached last week's lows and this may well be the final push before some profit taking kicks in."

Former London mayor Johnson will immediately march into a head-on collision with the 27 EU leaders and his own parliament should he beat his underdog rival, Foreign Secretary Hunt.

The weak pound meanwhile handed a boost to the London stock market, because it makes exports cheaper for buyers using stronger currencies.

"Sterling declines are helping to drive the FTSE 100 higher ... with markets gearing up for a likely Boris Johnson leadership," added IG analyst Joshua Mahony.

"Declines for sterling come as no surprise, with traders reflecting their expectations of a government led by a prime minister who has laid out a clear pathway for leaving without a deal in October."

Some analysts however are not entirely ruling out the prospect that Hunt could yet pull off a shock win.

"What would be far more interesting is if Hunt pulls off the latest and probably biggest shock and defies all odds to become prime minister," noted Erlam, "Given how he's seen as a far more moderate reformed Brexiteer, this would likely signal a softer Brexit and much reduced chance of no-deal.

"This may be a stretch too far, even if this, the age of political shocks," he conceded.

Asian stocks climb

Elsewhere, Asian stock markets rose Tuesday, tracking gains on Wall Street with confidence given a boost by a positive earnings season and speculation top US and Chinese negotiators will hold face-to-face trade talks soon.

A bipartisan agreement to raise the US debt ceiling to fund the government for another two years - avoiding another painful shutdown - also provided some cheer.

The gains across the board come a week before the Federal Reserve holds its next policy meeting at which it is expected to cut interest rates, with a big question over how deep it will go.

Key figures around 0945 GMT

Pound/dollar: DOWN at $1.2427 from $1.2476 at 2100 GMT

Euro/pound: UP at 90 pence from 89.85 pence

Euro/dollar: DOWN at $1.1184 from $1.1209

Dollar/yen: UP at 108.17 yen from 107.87 yen

London - FTSE 100: UP 0.5 percent at 7,555.77 points

Frankfurt - DAX 30: UP 1.1 percent at 12,429.86

Paris - CAC 40: UP 0.5 percent at 5,593.39

EURO STOXX 50: UP 0.8 percent at 3,516.56

Tokyo - Nikkei 225: UP 1.0 percent at 21,620.88 (close)

Hong Kong - Hang Seng: UP 0.3 percent at 28,466.48 (close)

Shanghai - Composite: UP 0.5 percent at 2,899.94 (close)

New York - Dow: UP 0.1 percent at 27,171.90 (close)

Brent North Sea crude: DOWN 0.2 percent at $63.16 per barrel

West Texas Intermediate: FLAT at $56.22