Boris Johnson took an impressive lead in the first round of votes for the next Conservative leader. Meanwhile, an attack on two oil tankers is not expected to leave a lasting effect on crude prices given the supply and demand imbalance. 

  • Pound capped as prospect of no-deal showdown sours sentiment
  • Boris takes the lead, yet ultimate decision doesn’t come from Westminster 
  • Crude gains likely to ease as tanker incident is overshadowed by supply-demand dynamics 

The pound looks at risk of another downturn as the prospect of a possible Boris Johnson led government begins to set-in. Attempts from the Labour party to rule out a no-deal Brexit have failed, and if Johnson gets into power it looks like an inevitable showdown over whether a no-deal Brexit can be forced through or whether another general election is required. For some, this vote is equally about who will be able to hold on to power later in the year if a general election is forced.  While today’s vote highlights an almost unassailable lead for Boris heading into next week, the crucial thing to remember is that the ultimate decision comes from Tory members rather than MP’s. Boris’ absence from much of the contest thus far highlights his team’s unwillingness to get caught up in the melee and risk denting his clear lead. Thus, unless we see any major shift in sentiment at the eventual TV debate, markets are likely to presume victory for Johnson, thus limiting any sterling advances. 

Crude prices volatility has been one of the key flash points for financial markets today, with the attack on two separate tankers near the Strait of Hormuz raising tension in the region. For all the finger pointing, this is essentially a warning shot that will likely to amount to little given the huge consequences of an actual full-scale conflict. Initial gains for crude are fading as markets contemplate the demand and supply environment, with the US pumping more than ever and OPEC downgrading estimates for global demand. Ultimately the US is happy to continue grabbing market share whilst driving prices lower to raise growth prospects. Meanwhile, with the US-China trade war unlikely to find a resolution anytime soon, we are likely to continue seeing demand wane as growth falters. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Feed news

Latest Forex Analysis

Editors’ Picks

EUR/USD rises above 1.1200 amid some USD weakness

EUR/USD is trading above 1.1200, recovering some of the losses. Earlier, ECB officials expressed concern about global growth President Draghi speaks later. Tension is rising toward the Fed decision.

EUR/USD News

GBP/USD falls to the lowest since January

GBP/USD is trading around 1.2550, the lowest since January. Sterling has been under pressure amid growing uncertainty about Brexit and USD strength.

GBP/USD News

USD/JPY remains directionless above mid-108s on Monday

The USD/JPY pair is struggling to make a decisive move in either direction on Monday as the slightly upbeat market sentiment doesn't allow the safe-haven JPY to gather strength.

USD/JPY News

Gold: Signs of bullish exhaustion ahead of the Fed

Gold's rally seems to have run its course with signs of bullish exhaustion emerging on technical charts ahead of Wednesday's FOMC (Federal Open Market Committee) rate decision.

Read more

Gold recovers early lost ground, back above $1240 level

Gold recovered a major part of its early slide and moved to the top end of its daily trading range, above the $1340 region post-US data.

Gold News

Majors

Cryptocurrencies

Signatures