Investors who were expecting fireworks and action from Boris Johnson's first speech as Prime Minister were left disappointed after Sterling offered a fairly muted reaction.
Johnson provided an optimistic view of his plans as Prime Minister while vowing to deliver Brexit before the October 31st deadline “no ifs or buts”.
The Pound’s static reaction to Johnon's speech suggests that markets are not fully convinced whether the new prime minister will be able to “walk the walk” after “talking the talk”. Although Johnson promised that he would secure “a new deal, a better deal” from the E.U on Brexit, this could be incredibly difficult given how Brussels has repeatedly said that the withdrawal agreement is not open for re-negotiation.
With 99 days left before the Brexit deadline, the path ahead for the British Pound is bound to be filled with many obstacles and more pain. Fears over the Unitied Kingdom crashing out of the European Union with Brexit no deal in place should ensure Pound weakness remains a major theme in the months ahead. Although Sterling seems to be enjoying the sunshine today, investors should remain alert as there are many storm clouds ahead.
In regards to the technical picture, the GBPUSD remains under pressure on the daily charts. Sustained weakness below 1.2500 should encourage a move back towards 1.2420 and 1.2350, respectively.
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