Though formal results for the UK elections will only be announced on Tuesday morning, several prominent news outlets, including Reuters, have published expectations for Boris Johnson to be named the next Prime Minister of the United Kingdom. Once the final election results are announced, Johnson is expected to assume his new position as of Wednesday afternoon, as Theresa May, the current prime minister, has stepped down after failing to get ample support for her Brexit deal.
Johnson has pledged to bring the UK to a full Brexit within three months, a very aggressive commitment after months of intense struggle within the British parliament. Also posing a challenge for Johnson will be the need to reopen discussions with the European Union, an opportunity which EU leaders have said is simply not possible. Johnson has said on several occasions that he is willing to lead his country to an exit even without solid transition agreements, a move that could lead to significant economic problems for the UK.
The pound was lower against most of its primary trading partners on Tuesday morning in Asia, as traders worried about what may be next for the UK. The sterling fell 0.09 percent against the U.S. dollar as of 10:32 a.m. HK/SIN, to trade at $1.2464, hovering near the 27-month low of $1.2382 that the pair saw last week before it headed higher. The sterling was also modestly lower against the euro, trading at 0.8983.
Also pressuring the currency markets on Tuesday morning was anticipation for the European Central Bank policy meeting after which ECB President Mario Draghi is largely expected to signal an upcoming interest rate hike as early as September. Traders are also anxious to hear from the U.S. Federal Reserve which will be meeting next week and is also expected to cut interest rates. If implemented, this would be the first interest rate cut in the United States in over ten years.
The dollar was up against the euro, with the common currency falling 0.11 percent to $1.1197 in the early hours in Asia. The greenback also gained against the yen, up 0.16 percent to 108.03.