Johnson's Rise to PM Weighs on Pound

The Pound continues to be weighed by expectations that the next Prime Minister is likely to be Boris Johnson, which will mean that any possibility of a soft Brexit is dwindling. On Friday, one of the stronger contenders for the PM's post, Matt Hancock, withdrew from contention after securing only 20 votes during the first round of voting. Afterward, the Health Secretary had said that he believed Johnson would be the best person to lead the Conservative Party. Analysts say that the likelihood of a “disorderly Brexit” has grown to 25%, up from 15% according to a May poll.

As reported at 11:32 am (GMT) in London, the EUR/GBP was trading at 0.8905 Pence, up 0.0584% and off the session peak of 0.89170 Pence while the low was recorded at 0.88930 Pence. The GBP/USD was trading at $1.2593, up 0.0191%; the pair has ranged from $1.2572 to $1.2600 in today's session.

Markets Rethink Fed Outlook

In the US, markets are reevaluating the Fed's possible position given the latest economic data which was unexpectedly upbeat. The US central bank will be making its policy decision on Wednesday and analysts are still expecting it to remain firm as regards interest rates. But the statement will be scrutinized for clues as to a shift in sentiment towards a tighter policy once again. Last Friday, the US Census Bureau reported that the data for Retail Sales Control Group for May came in at 0.5%, beating analysts forecasts of 0.4%; the previous data was also adjusted to -0.4% from -0.5%.