The new face of Brexit

Who will eventually take over from the resigned British Prime Minister Theresa May? The members of the Conservative Party will be allowed to make their voices heard at the end of July, but first the contenders will fight it out in parliament.

The battle is about to begin, and I don't mean by that the trade dispute between the United States and China. I am talking about the political battle over who will be the new leader of the Conservative Party and the new Prime Minister of Great Britain. The winner faces the enormous challenge of bringing Brexit to a successful conclusion. The burnt out and extinguished May can talk about it: this is easier said than done. Still, 10 candidates are eager to take over.

The Crown Prince: Boris Johnson
Boris Johnson, the former mayor of London, is by far the biggest candidate for the position of May. He resigned as foreign minister last fall because he disagreed with May's attempt to lead the country out of the European Union. Johnson voted for Brexit in the 2016 referendum and has the support of about 50 party members in parliament.

Recently, however, Johnson threatened not to pay the €44 billion severance package to the European Union until a new settlement is formed. However, with his eccentric behavior and sharp statements, he is very sensitive to scandal. A Johnson victory is therefore a harbinger of new exchange rate shocks for the British pound.

The Challenger: Jeremy Hunt
According to several British betting companies, former businessman Jeremy Hunt is, after Boris Johnson, the biggest candidate to succeed former Prime Minister May. Hunt is fluent in Japanese and in the referendum voted to remain in the European Union. However, he has now joined the Brexit camp.

Unlike many party members, Hunt does not want to turn his back on Europe without an agreement. In his view, that is political suicide for the Conservative party. However, due to his reluctance to threaten a Brexit without proper agreements, he may miss out on the premiership.

Other contenders
In addition to Johnson and Hunt, 8 other politicians are running for the premiership. For example, Michael Gove, the former environment minister, wants to leave the European Union before the October 31 deadline. However, his chances diminished considerably when he confessed that he once used cocaine 20 years ago.

Then there's Andrea Leadsom, who was also very close to leadership in 2016. For now, however, the British pound is the biggest loser, as the major contenders are fiercely opposed to the European Union. The currency has already lost nearly 3% in the past month. So it will be a wild ride towards the voting round in the week of July 22.

Joost Derks

Joost Derks is a currency specialist at iBanFirst. He has over twenty years of experience in the currency world. This column reflects his personal opinion and is not intended as professional (investment) advice.

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