Boris Johnson rules, Sterling volatility rises

New British Prime Minister, Boris Johnson, announced his plans about suspending parliament decisions for 5 weeks, starting from the beginning of September

The Sterling reacted immediately and dropped by 0,5 % with raising volatility measure. This move will dramatically shorten the time period for preventing Britain to exit EU without a deal on October 31. The possibility of “hard” Brexit rose as well as possibility of chances of a vote of no confidence and subsequent national election. Critics said that Johnson wants to limit the time lawmakers have to pass necessary legislation to stop a no-deal Brexit. The Prime Minister replied that there will be enough time for Brexit debate.

On Monday, Sterling drops approx. 0,5 % versus the US Dollar as low as GBP/USD 1.2094 (two-week low), against the Euro declined by 0,4 % to EUR/GBP 90.70. Three-month implied volatility of Sterling reached its highest level since December 2018.


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