The Brexiteer fought off Jeremy Hunt with nearly 50,000 more votes than his rival to secure victory in the Tory leader contest. The pound had dipped this morning at about 8am, but has rallied as traders banked on a Boris certainty. By midday the pound had regained losses and was looking stable at 1.2460 dollars compared to 1.2474 dollars at the previous close. The euro at 12pm was 0.8976 pounds compared to 0.8988 pounds at the previous close.
Ed Conway, economic editor at Sky News said: “Not much currency market reaction.
“Over the last few weeks pound has weakened a lot. It’s improved a little over the last week. But today just a little blip. No-one is panicking, everyone is waiting for policies.”
Sterling had fallen for the third straight day, as the dollar firmed.
Despite fears about no deal, markets have not been shaken by Mr Johnson’s win, expecting the result.
Mr Johnson attracted 92,153 votes from Tory members, while Mr Hunt received just 46,656 votes.
READ MORE: Boris Johnson crowned new Prime Minister – now let’s get Brexit done
Mr Johnson has declared that Britain will leave the EU on the latest Octover 31 Brexit deadline even if no transitional arrangements are in place.
Investors will be watching closely to see how many ministers unhappy with a Johnson government will resign, as well as the make-up of his cabinet.
Two junior ministers have already quit over Johnson’s plans, and finance minister Philip Hammond and justice minister David Gauke have both said they plan to resign before they are sacked.
Johnson’s belligerent tone has taken sterling 2% lower against the dollar this month, and it has depreciated in 11 weeks out of the past 12.
But with Johnson the overwhelming favourite to win the contest, a big sterling move after the announcement was never expected, with greater focus on the new prime minister’s first speech in office and cabinet appointees.
The pound stabilised today after weeks of dropping as markets worry about a no deal Brexit, Craig Erlam, senior market analyst at OANDA said
He said: “The initial response to the announcement has been rather subdued given the build-up to the event but then, it was so widely expected and heavily backed that it’s perhaps no surprise.
“Johnson comfortably led from the outset and clearly appealed more to the Tory membership when it comes to Brexit which is why few people ever gave Hunt a chance.
“The question now is whether the pound can recover from its slump in the near-term or whether the risk of no-deal is just too great and every passing week is seen to take us one week closer to the cliff-edge.”
Mizuho strategist Colin Asher said: “News of Johnson becoming the next prime minister is unlikely to move sterling. Markets will be looking to see how much he is genuinely prepared for no-deal Brexit. He has said it’s “do or die” but the question is, how reliable is that promise?”
“We are in sort of a phoney war period, he can get on with Brexit preparations but the real action will happen when parliament reconvenes after the summer break.”
Options markets appear to be relatively calm, though overnight implied sterling volatility has risen to a one-month high around 8.3 vols.