Formerly the mayor of London and, since July 2016, the foreign secretary for the UK, Boris Johnson has been a well known public figure for many years. As mayor of London, he was known for his carefree attitude when it came to his duties in that office, but as foreign secretary it is fair to say that his role in the government has become far more serious and impactful on the UK economy and politics.
Foreign affairs can often have a significant bearing on exchange rates, so it is feasible that Boris Johnson’s current office, as well as his actions, may have affected GBP/EUR. Here are some considerations in relation to this.
Boris Johnson was one of the figureheads of the Brexiteer campaign, advocating a complete withdrawal from the EU. He came to office shortly after the British public narrowly voted to leave the EU and the GBP/EUR rate crashed by 7%. As such, his position as a Brexiteer may well have managed to sway some of the public in favour of Brexit, with the Brexit vote having a direct impact on the GBP/EUR rate.
Whilst his actual influence on the vote is impossible to measure, his fame and time and in the public eye is likely to at least have helped the Brexit cause gain some momentum, meaning that he may have indirectly affected GBP/EUR to some extent.
It is worth pointing out, however, that there are many other factors which influence the GBP/EUR rate, one of which is the decisions of the Bank of England and the European Central Bank. These have a major influence over the UK and EU economies as they set interest rates and make decisions which can greatly affect areas like consumer spending. When it was hinted that the ECB was winding down its Stimulus Programme, for instance, the GBP/EUR rate fell.
As the BoE and ECB are independent from the government, Boris Johnson will certainly not have influenced the decisions of either, calling his overall impact on GBP/EUR into question.
Despite the prestige and importance of his office, Johnson has earned himself a reputation for not holding back on his opinions and emotions. Whilst this has often made him a popular and entertaining figure, it could well have consequences for GBP/EUR.
In his most recent outburst, for example, he exclaimed ‘f*** business’ when quizzed on the fears of business leaders over Brexit. Incidentally, the GBP/EUR rate has sunk slightly in the time since the first news articles about this were published (from around 1.138 to 1.134). Whilst his outburst cannot be conclusively linked to the drop in the exchange rate, it could well be the case that those trading GBP/EUR may well have lost confidence in the pound after the foreign secretary’s blasé and controversial response to such a serious issue.
Those trading forex through a broker will no doubt be aware of how sensitive the market is to political events. Undoubtedly one of the most important factors in any forex investor’s decision (and, in turn, the value of any given currency) is the strength of a country’s government.
The current government is incredibly divided (mostly over Brexit), and Johnson has been a strong force in the Brexit camp, meaning he could well be viewed as a divisive figure within the government. This may have affected the government’s ability to make effective decisions in relation to the economy and Brexit, further damaging investor confidence over the last two years.
Ultimately, Boris Johnson’s actions in recent times have certainly caused a stir on many occasions, but as for directly impacting the GBP/EUR rate, it is unlikely that his actions have made a significant/direct difference. Whilst he certainly has the ability to indirectly affect the rate as a result of the office he holds as well as his influence as a public figure, there are, on balance, much more significant factors at play when it comes to the GBP/EUR rate.