Breaking: Boris Johnson becomes next PM of UK as expected, GBP/USD rises

FXStreet Team FXStreet

In a widely expected outcome, Boris Johnson became the new leader of the Conservative Party, receiving an impressive 92,513 of Tory votes to beat Jeremy Hunt, who received 46,566 votes, and replace Theresa May as the next Prime Minister of the United Kingdom.

With the initial market reaction, the GBP/USD pair extended its rebound and turned flat on the day at 1.2470. Meanwhile, the EUR/GBP pair slumped to a daily low of 0.8960 before recovering modestly and was last seen trading at 0.8970, losing 0.12% on a daily basis.

In a speech following the announcement, Johnson said that their mantra was "deliver Brexit, unite the country and defeat Labour's Corbyn."

Market implications

Boris Johnson on numerous occasions said that he wanted to renegotiate the Brexit deal with the EU and argued that they need to keep the option of a no-deal Brexit if they wanted to have a better deal. On the other hand, the EU made it clear that the Withdrawal Agreement is the final deal they will offer and that they will not reopen negotiations. If the probability of a no-deal Brexit rises as we move closer to the October 31 deadline and don't see any progress, the British pound is likely to continue to weaken against its rivals.

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