The realization that the next Prime Minister might be Boris Johnson has sent FX markets into panic mode and earlier pushed the Pound to a 5-month trough versus the Euro. If Johnson is confirmed as the successor to Theresa May, concerns that a chaotic Brexit will occur at the October deadline will continue to escalate. Analysts say that the second voting round could cement Johnson's hold as the Tory's heir apparent among likely rivals to the PM's seat. Since the beginning of May, the Pound has lost 6% of its value relative to the Euro and currency strategists say that wary traders are likely to keep it under pressure.
As reported at 11:19 am (GMT) in London, the EUR/GBP was trading at 0.8932 Pence, down 0.1955% and well off the earlier peak of 0.89750 Pence; the low for the session was recorded at 0.89220 Pence. The GBP/USD was trading at $1.2526, a loss of 0.0774%; the pair has ranged from a trough of $1.2512 to $1.2545 as the peak.
CPI Data Disappoints
In the Eurozone, the latest personal inflation data came in as expected or worse, which is weighing on the Euro. Eurostat reported that the year-over-year CPI Index and Core CPI Index for the month of May came in at 1.2% and 0.8%, largely as expected, but below the previous readings of 1.3% and 1.7%, respectively, which were both upwardly revised. On a month-over-month basis, CPI and Core CPI missed analysts' expectations with a reading of 0.1% and -0.1%, respectively, against the predicted 0.2% and 0.0%, while the previous reading for Core CPI was revised downward to 0.0% from 0.9%. The EUR/USD was trading at $1.1197, down 0.2397%.