It is safe to say the pound’s enthusiasm for a Boris Johnson government has waned significantly since last Thursday’s exit poll.
Some were hopeful that, with an 80-seat majority, the Prime Minister would be less beholden to the hard Brexiters in his party. Mere days into this new government and that doesn’t seem to be the case at all.
The plan to prevent any request for a transition period-extension – one that leaves a rather nasty no-deal cliff-edge for the end of 2020 – dramatically undermined sterling’s initial post-election positivity. Falling a further 0.2%, cable is now at a sub-$1.31, 2-week low, having been at $1.35 at points last Friday. Against the euro, meanwhile, a flat start has the pound at a similar fortnightly nadir of €1.1768.
Though they’ve moved in tandem recently, the pound’s persistent funk allowed the FTSE 100 to add 0.3% after the bell, pushing it above 7540. In contrast, the FTSE 250 – more susceptible to Brexit concerns – was down 1.4%.
Tuesday’s jobs report only added to sterling’s headache – will Wednesday inflation data be a similar problem for the currency? Analysts are expecting a slight decline from 1.5% to 1.4% month-on-month, with the core reading steady at 1.7%.
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