After being dubbed as the favourite by many and winning today’s Tory leadership race, deVere Group CEO and founder Nigel Green claimed the pound will “not drop too much” or “for too long”.

However, despite arguing that Johnson’s clarity will not cause a “price shock”, he said: “Sterling is currently floundering due to the ongoing Brexit chaos and uncertainty which has put the brakes on the UK economy.

“The pound’s weakness has also been driven by fears regarding Mr Johnson’s embrace of the possibility of a no-deal Brexit on 31 October, with many forecasting an economic shock for Britain if this were to occur.”

Green highlighted that, prior to the confirmation, markets had already prepared for the announcement of Boris Johnson as Theresa May’s successor and had priced it into the pound.

“Boris Johnson has been the clear favourite in this leadership race since the beginning,” he added. “As such, the markets have been pricing-in the immediate impact on sterling of a Johnson administration. It can be expected that there will be a knee-jerk reaction for the pound to the downside on the announcement that Boris Johnson has won the keys to Number 10. But as it is expected and priced-in, it will not drop too much further or for too long.”

The deVere CEO suggested that Johnson’s “do or die” approach – and a hard Brexit – could put an end to the “years of failed negotiations which have fuelled endless uncertainty for business and the markets.”

“A quicker and cleaner exit from the EU could indeed deliver an unexpected boost for the pound as international and domestic investors get the clarity they crave before stepping off the sidelines and investing into the UK,” he argued.

In his closing comments, Green acknowledged that sterling will “suffer a dip” on the news that Boris Johnson has been voted as the new Tory leader, though implied that the bigger “surprise” could be the clarity of purpose of a Johnson administration on the overriding issue of the day – Brexit.

“The importance of clarity for the markets and business should not be underrated. It now just remains to be seen if the former London Mayor and foreign secretary delivers on what he has said– or whether there will simply be more Boris bluster, which would sink the pound further and kill-off investment hopes,” Green concluded.

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