Yesterday, Boris Johnson was announced as the leader of the conservative Tory party. He secured the victor after winning more than 92k votes. His competitor, Jeremy Hunt won more than 46k votes. The former Mayor of London will become the prime minister today after Theresa May resigns.
Boris becomes prime minister at a difficult time. As he enters 10 Downing Street, Boris will not even have a honeymoon period, which most of other prime ministers have. This is because he is such a divisive figure in the UK politics. Eurosceptics believe that he is a good person who helped secure the votes to leave the European Union. They believe that come October 31st, he will succeed by taking the country out of the EU, with or without a deal. Pro-Europeans hate him for supporting Brexit, which they believe will wreck the country’s economy. He is expected to start forming government right away.
However, Boris will have one of the most challenging role in the world. He takes over when the parliament that he needs to succeed is more divided than ever. The Labor Party led by Jeremy Corbyn and the Tories are not in agreement on most issues. Tories are divided on the future of the country. Further, the coalition partnership that the party has formed is expected to weaken. Already, some of the ministers that served under Theresa May have resigned or are expected to resign today. These include people like Anne Milton, David Gauke, and Philip Hammond.
Therefore, there is a likelihood that no bill that Boris Johnson will pass will be accepted in parliament. His problems will be the same ones that brought Theresa May down. The parliament will not pass any bill that he will present to them.
To help deal with this, there is a likelihood that Boris will call for a snap election. This could come as soon as in autumn. In fact, Boris has already assembled a team of seasoned pro-Brexit campaigners to arrange the next election. This election will give him more mandate to execute the Brexit mandate. In this election, he is expected to team up with Nigel Farage, who formed the Brexit party a few months ago.
On a positive note, Boris Johnson has an ally in the West. He and Donald Trump are close allies who respect one another. The two leaders are expected to start talks on how to improve trade and cooperation between the two countries.
In recent days, the sterling has been weakening. The GBP/USD pair has dropped to a low of 1.2380, which is the lowest level since April 2017. On the five-year chart below, the price is below the 50-day and 100-day moving averages. There is a likelihood that the pair will start rallying as Boris starts his new term.