By Ashley Finill
After a torrid week for the Prime minster, Boris Johnson finally threw in the towel, he announced yesterday outside Number 10 that he is to step down from his role in October after an orderly transition period. Boris’s position as PM had been under increasing pressure for months, however the final nail in the coffin was hammered last week as reports emerged of improper conduct from the chief whip of the conservative party Chris Pincher. It came to light that this was not the first time allegations like these had been made against the MP and Boris was already aware of his ‘mischievous attitude’ for a milder way of putting it. This was the last straw for most of his more loyal cabinet members and Tory party members.
The Conservative Party in their droves started resigning from government earlier this week, the first big blows came from the Chancellor Rishi Sunak and Savid Javid handing in their resignations, and by Thursday morning 52 MPs had followed with them. One of the biggest shocks was Boris appointing Nadhim Zahawi as Chancellor, to then only 24 hours later tell Boris to “do the right thing and go” – but Boris hung on, sacking Michael Gove in the early hours of Thursday morning but the ride was over, Boris then later that day resigned publicly. He will stay as prime minister until October, in that time there will be a vote within the party to put forward candidates for the role of Prime Minister with the vote being held around October time. Historically, when a Prime Minister has either been removed from office or resigned, Sterling almost certainly has negative response. However, the Pound has made steady gains over this past week presenting a great buying opportunity, as we have seen with an influx of purchases on Euros with many of you already taking advantage of the current 2-month highs.
Euro Weakness
It is not just Boris Johnson having a bad week, the Euro is also in a pitiful state seeing gains made across the board against the single currency. USD/EUR has been in somewhat of a free fall, this week alone the US Dollar has gained over 1.5% on the Euro as the USD/EUR spiral towards parity. ING have said that it is now likely that parity is on the horizon which may cause fireworks in the currency market. A strong US dollar and fragile Euro have all been dictated by the War in Ukraine.
The Dollar is seen as a safe haven currency so when crisis like this occur investors lodge their money on the Dollar which Strengthens the Currency, as a result other currencies weaken as they are not favoured in times such as this, which is why we have seen a weak Pound and Euro with record losses being seen against the greenback. The Euro also has another thorn in its side due to the conflict which is gas being supplied from Russia to mainland Europe, mainly into Germany which has massively affected energy prices in the country causing their economy to shrink and being the biggest economy within the EU as a result weakens the single currency significantly. This is why Sterling is having some joy recently against the Euro which gives buyers of the Euro a great opportunity to take advantage whilst the better rates are still available. The currency market is a volatile and unpredictable place, as we have seen over the past few months, with highs can come lows and without a moment notice, holding out for more could give you less should the unforgiving market take a turn.
Get in contact with your currency consultant today to discuss your options and for some friendly professional guidance.