British Prime Minister Boris Johnson has survived the no-confidence vote on Monday, but 148 MPs still voted against him, a relatively high figure by historical standards. As highlighted by economists at MUFG Bank, UK political instability is not good for the pound.
A hollow victory for Boris
“The result of the confidence vote in PM Johnson last night was not a particularly favourable outcome for the prime minister. It was a victory of course – by 211 votes to 148 votes – but perhaps a hollow one.”
“The difficult economic outlook that lies ahead will be far more difficult to get through with a PM that lacks support. Difficult policies like altering the framework of the Northern Ireland Protocol that is integral to the relationship with the EU and the Withdrawal Agreement points to further divisions down the road.”
“We already have GBP forecasts that indicate underperformance and weaker GBP/USD levels than the current spot level through Q3 and the outcome of last night’s vote is consistent with our bearish GBP view.”
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