Jul 30, 2019

Boris Johnson's government is scaring investors away from the pound

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Data: Investing.com; Chart: Axios Visuals

Currency traders are aggressively pricing in a no-deal Brexit scenario after remarks over the weekend from the U.K.'s new government, headed by Prime Minister Boris Johnson, and are selling the pound as a result.

What's happening: Michael Gove, who is in charge of planning for a possible no-deal exit from the EU, has said the British government is "working on the assumption" that it will leave without a deal.

  • The pound on Monday dropped 1.3%, and fell further Tuesday morning, touching its lowest level against the dollar in close to 3 years.

What they're saying: "The new UK government wants to show its determination to leave the EU without a deal in less than 100 days to bolster its negotiating position," Marc Chandler, chief market strategist at Bannockburn Global Forex, said in a note to clients.

  • "It does not appear to be scaring European officials but is scaring investors who are leaving sterling."

Go deeper: Boris Johnson begins by blowing up Theresa May’s Cabinet

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Bolton: Trump administration enthusiastically backs no-deal Brexit

National Security Adviser John Bolton addresses journalists in London Monday. Photo: Peter Nicholls/Reuters

The Trump administration supports a no-deal Brexit and Britain is "first in line" for a trade deal with the U.S., National Security Adviser John Bolton told reporters after meeting with U.K. Prime Minister Boris Johnson, the BBC reports.

"To be clear, in the Trump administration, Britain's constantly at the front of the trade queue, or line as we say. We want to move very quickly. We wish we could have moved further along in this with the prior government."
Go deeperArrowAug 13, 2019

Trump promises "very big trade deal" with U.K. as Brexit deadline looms

Britain's Prime Minister Boris Johnson and President Donald Trump at the G7 summit in Biarritz, France, Sunday. Photo: Stefan Rousseau/Pool/Getty Images

President Donald Trump promised Britain Sunday a "very big trade deal" with the U.S. — "bigger than we’ve ever had with the U.K." — and declared British Prime Minister Boris Johnson the "right man" to oversee Brexit, Reuters reports.

The big picture: Trump said Britain leaving the EU would be like losing "an anchor round the ankle," per the BBC. But as the Oct. 31 Brexit deadline looms, it is still unclear whether the United Kingdom can leave the European Union with an agreement in place or, indeed, whether the U.K. will leave the EU. Johnson has vowed it will happen "do or die," but experts warn that leaving without a deal could have catastrophic consequences.

Go deeperArrowUpdated Aug 25, 2019

Pelosi rules out U.K. trade deal if Brexit creates hard border with Ireland

Nancy Pelosi speaks at a reception hosted by Irish Taoiseach Leo Varadkar in the State Apartments in Dublin Castle. Photo: Iain White/Pool/Getty Images

House Speaker Nancy Pelosi said in a statement Wednesday that there is "no chance" of a U.S.-U.K. trade deal passing Congress if Brexit violates the terms of the Good Friday Agreement, which helped bring peace to Northern Ireland in 1998 by creating a seamless Irish border.

The big picture: Pelosi's statement is in response to comments made by national security adviser John Bolton, who said this week that the Trump administration enthusiastically supports a no-deal Brexit and that the U.K. is "first in line" for a trade deal with the U.S. If Prime Minister Boris Johnson takes the U.K. out of the EU without a deal on Oct. 31, as is the legal default, customs checkpoints would theoretically need to be erected along the Irish border — risking a flareup of sectarian violence.

Go deeperArrowAug 14, 2019