Pound Slides As Boris Johnson Heads To Win UK Leadership Contest
21 June 2019 - 5:43PM
RTTF2
The pound weakened against its major counterparts in the
European session on Friday, as odds of Boris Johnson winning the
U.K. leadership race for the Conservative Party intensified, after
the former Foreign Secretary extended his commanding lead in the
contests to succeed May.
The contest has come down to two, either Johnson or Jeremy Hunt,
who will now face off in a vote among the U.K.'s Conservative Party
members, with the results set to be announced in the week of July
22.
Markets are putting a 85 percent chance of Johnson win in the
Conservative Party leadership contest.
Data from the Office for National Statistics showed that UK net
borrowing decreased in May, but was more than economists' had
expected.
The public sector net borrowing, or PSNB, excluding banks fell
to GBP 5.1 billion from GBP 6.8 billion in April. Economists had
forecast GBP 4.2 billion borrowing.
The currency traded mixed against its major counterparts in the
Asian session. While it held steady against the franc and the euro,
it fell against the yen. Against the greenback, it rose.
The pound dropped to a 3-day low of 0.8933 against the euro from
Thursday's closing value of 0.8889. The next possible support for
the pound is seen around the 0.92 level.
Flash survey data from IHS Markit showed that Germany's private
sector growth remained unchanged in June.
The flash composite purchasing managers' index, or PMI, showed a
reading of 52.6 in June, same as seen in May. Economists had
forecast a reading of 52.5.
The U.K. currency edged lower to 1.2652 against the greenback,
from a high of 1.2725 hit at 10:00 pm ET. On the downside, 1.24 is
probably seen as the next support level for the pound.
The pound declined to 1.2428 against the franc, its lowest since
January 10. If the pound falls further, 1.23 is likely seen as its
next possible support level.
The pound that closed Thursday's trading at 136.29 against the
yen fell to a 2-day low of 135.97. The pound is seen finding
support around the 133.00 level.
Data from the Ministry of Communications and Internal Affairs
showed that Japan consumer prices increased 0.7 percent on year in
May.
That was in line with expectations and down from 0.9 percent in
April.
Looking ahead, Canada retail sales for April, U.S. existing home
sales for May and Markit's services PMI for June will be out in the
New York session.
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