British pound appreciates as Boris Johnson wins UK election

//British pound appreciates as Boris Johnson wins UK election

British pound appreciates as Boris Johnson wins UK election

The Wall Street Journal: British Pound Surges as Johnson’s Conservatives Win U.K. Election

Article published: Dec 13, 2019

IB Economics syllabus: International economics (exchange rates)

“The pound surged to its highest level since May 2018, hitting $1.3515.” This is due to the fact that the Conservatives, led by Boris Johnson, have won the election in the UK massively and as a result there is now greater certainty, while “U.K. markets have been under a cloud of Brexit uncertainty since the June 2016 referendum” This means that with more certainty, business confidence should also increase, which leads to more demand for the GBP (Great British Pound), driving up the exchange rate (appreciation) as shown in the diagram at the top.

Update: the initial increase in the ER has vanished since then.

Source of image: Tullett Prebon

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By | 2019-12-18T12:56:48+00:00 December 18th, 2019|International Economics|Comments Off on British pound appreciates as Boris Johnson wins UK election

About the Author:

My name is Daniel Szekely and I work as an IB Economics tutor, examiner and teacher. Having earned an MA degree in Economics at the University of Aberdeen, I started my career as a financial analyst at Morgan Stanley, one of the largest investment banks of the world. Yet, despite the promising career prospects of the banking industry, I decided to make a larger social impact by becoming a teacher. Currently, I teach IB Economics at SEK Budapest International School and have been an examiner for over 8 years. I started EconDaddy as a simple blog to share great articles with my students and others taking IB Economics around the world to use for their commentaries. Being a practicing IB Economics tutor, I have first hand insight into the most common mistakes of students, so the EconDaddy blog now also provides exam and commentary writing tips.

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