The pound rose to a three-year high against the Euro immediately following Boris Johnson’s victory in the UK General election.
Brexit has, over the last three and a half years, been bad news for sterling, but the currency markets have long been “pricing in” the various outcomes. What they really dislike is uncertainty, and the removal of this factor following the big Conservative victory on 12th December led to feverish activity on the stock exchange, with the Pound rising to €1.20 against the Euro.
Key to this reaction is the size of Boris Johnson’s majority, which means he will not have to rely on the support of other parties or smaller factions within his own party. Many hope that this will allow Johnson to move away from the bullish hard talk that marked his campaign and be pragmatic enough to opt for the softer Brexit deal he is said to secretly favour.
The EU has already said it may seek an extension to the transition period that is due to end on the 31st December this year. During this time, the UK will, to all intents and purposes, remain within the EU while the vital trade deals that govern the future relationship between the UK and the EU are organised.
However, that transition date was originally conceived to cover a period from Theresa May’s original Brexit date of March 31st last year. Delay in getting the Withdrawal Agreement passed by parliament has almost halved the time available for these negotiations, and many believe that completing them in 11 months is impossible.