If Boris Johnson shifts his Brexit plans, the pound could trade 'north of $1.35,' says UBS - CNBC

Newly elected leader of the Conservative party Boris Johnson leaves Conservative party HQ in London, after it was announced that he will become the next Prime Minister.

Stefan Rousseau | PA Images | Getty Images

Incoming British Prime Minister Boris Johnson may need to rethink his stance on Brexit, given Parliament's opposition to a so-called hard Brexit, a UBS investor projected on Wednesday. That's likely to impact the weakened pound, he said.

Johnson, who won the race to the lead country on Tuesday, previously said the U.K. must leave the European Union by Oct. 31 "do or die, come what may."

But that may not continue to be his outlook as he weighs the best path forward.

"Being a prime minister, things can change, and so maybe we also think about a little bit of an extension to the Brexit negotiation," Dominic Schnider, head for commodities and Asia Pacific foreign exchange at UBS Global Wealth Management, told CNBC's "Squawk Box."

Should Johnson soften his perspective on Brexit, there will be consequences for the British pound, Schnider projected.

"If the market realizes that the hard Brexit probability starts to shrink, I think the pound can come back. So we're probably going to trade north of $1.30, $1.35, somewhere there," Schnider said.

The pound closed at $1.2436 on Tuesday, edging near the two-year trough of $1.2382 it brushed last week. The pound is down more than 13% since the U.K. voted to leave the EU on June 23, 2016. 

Recent sterling lows have been attributed to Johnson's insistence on Brexit.

"In our view, Johnson's desire to push for Brexit, deal or no deal, increases the chance of an early general election and some possibly (of) nasty GBP outcomes," Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, wrote in a recent note.

A reduced probability of an upcoming British election, due to disagreements on Brexit between Parliament and Johnson, could also give the pound a lift, Schnider told CNBC.

However, he noted that it wasn't necessarily the election's outcome that would make a difference to sterling.

What's more important for traders, he said, is the sentiment about whether "the U.K. and European Union jointly try to solve this issue and not depart in an unfriendly way."

A "no-deal" Brexit, which investors are concerned will happen come Halloween, will mean the U.K. leaves the European bloc without reaching a formal deal. That is, there would be no transitional period for the British government to negotiate free trade deals. Many have suggested such a disorderly exit risks damaging the U.K. economy.

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2019-07-24 08:15:36Z
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The Queen officially decides who becomes Prime Minister. Here's what else happens in the next few days - CNN International

On Wednesday afternoon, Johnson will visit Her Majesty Queen Elizabeth II, who will officially invite the new leader of the UK's governing Conservative party to form a government.

After his short meeting with the Queen, the new prime minister and his new principal private secretary will travel back to Downing Street, where, traditionally, new PMs give a speech to the nation outside the black door of Number 10.

Before all of that, outgoing leader Theresa May will address lawmakers in the House of Commons at her last-ever session of Prime Minister's Questions -- the raucous Punch and Judy show that takes place every week that parliament sits.

Prime ministers often use their final PMQs to settle political scores and thank loyal supporters. Given the nightmare through which May has attempted to govern, people who love political theater will be hoping for a good dose of the former.

After her final address to the Commons, May will travel to Buckingham Palace and inform the Queen that she is resigning as PM.

Tradition is that May would then suggest another person who is best placed to form a government and that the Queen would invite this individual to the palace.

That's the formal stuff, now for the politics.

After walking into Downing Street for the first time, a new prime minister has a couple of pressing issues to address. First, the civil service will brief the new leader on everything -- yes, everything -- they need to know for the job.

There are other tasks that need doing in the first week. From issuing instructions on what the UK's ballistic submarines should do if London is taken out in a nuclear strike, to arranging advisers and political appointments, it's a hectic period.

More immediately, Johnson will need to get on with forming his government. Right now, no one knows who the new PM will ask to serve. During the leadership contest, he attracted admirers from across the entire Conservative party.

Rumors are wild, but the common consensus in Westminster is that more people believe they are in the running for jobs than there are vacancies. This would mean that Johnson may have to let a lot of people down in his very first week.

Whoever is appointed, it will be seen as the first sign of what kind of prime minister he intends to be, especially when it comes to Brexit.

We know that Johnson's preferred option is a deal with Europe that is significantly different from the one that May negotiated. He is also committed to leaving without a deal on October 31, if necessary.

There are two key questions here: First, how different does that deal have to be? Second, how committed is he to no deal?

The broad Johnson coalition contains people who were consistently loyal to May's softer approach to Brexit and, in contrast, some of the hardest Euroskeptics in the Conservative party. He has a lot of talent to pick from and the formation of his new-look government will be watched closely, both in London and Brussels.

However, this might all be academic. It's no secret that May has left a political mess behind her. This leadership contest and the razzamatazz of Johnson's campaign has been a bit of a distraction. There might be a new top team, but Johnson will stride into Downing Street facing many of the same problems as May.

He has no majority in the House of Commons. His party is bitterly divided over Brexit. The nation is losing trust in politicians and political institutions. The opposition Labour party is primed to bring Johnson down and force a general election. And the Europeans, with whom he hopes to negotiate a new deal, are far less trusting of Johnson than they were of May.

It may come to be that after electing such a divisive figure -- for some, Johnson embodies the worst aspects of a political party loathed by a decent chunk of the population -- the Conservatives find themselves fighting an early election with a leader who alienates a large number of the people who voted Remain in 2016. And remember, that victory was far from emphatic.

So, after he meets the Queen to collect his crown (not literally), Johnson has his work cut out for him. The boy who dreamed of being prime minister might find on day one that he is a weaker leader than his long-suffering predecessor. Thank goodness parliament is due to rise for the summer on Friday and not return until September.

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2019-07-24 07:00:10Z
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China Hints at Use of Force in Hong Kong and Says U.S. Is Undermining Stability - The New York Times

BEIJING — China on Wednesday warned that it would not tolerate protesters’ efforts to threaten the central government’s authority in Hong Kong and suggested that it could, if necessary, mobilize troops in the People’s Liberation Army garrison there to maintain order.

The warning came as the government released a new defense strategy that accused the United States of undermining global stability and identified separatism as China’s most immediate security threat.

In the case of Hong Kong, the chief spokesman for the Ministry of National Defense, Senior Col. Wu Qian, cited the protests on Sunday outside the central government’s liaison office in Hong Kong, which protesters painted with graffiti, suggesting that instances of violence were straining Beijing’s patience.

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The chief spokesman for China’s Ministry of National Defense, Senior Col. Wu Qian, during a news conference in Beijing on Wednesday. He said that the behavior of some radical protesters in Hong Kong “cannot be tolerated.”CreditAndy Wong/Associated Press

“The behavior of some radical protesters challenges the central government’s authority, touching on the bottom line principle of ‘one country, two systems,’” Colonel Wu said during a news conference announcing the new security strategy. “That absolutely cannot be tolerated.”

He pointedly cited a specific article in the Basic Law, which details relations between the city and Beijing, that allows the People’s Liberation Army to intervene to maintain order or assist in cases of natural disasters, when asked by Hong Kong’s leaders.

Beijing’s defense strategy, the first to be released in six years, also refused to rule out the use of force against Taiwan, which China claims as its territory, in the event the self-governing democracy took any formal steps toward independence. The document cited “external forces” that support such moves, an oblique reference to the United States, which has long provided political and military support to Taiwan.

The warnings about what are, to China, core matters of sovereignty underlined growing concern about threats to the central authority of the Communist Party government under Xi Jinping, who has repeatedly pledged never to cede any territory. Although China has long warned Taiwan against declaring formal independence, the warnings about the island were more detailed and voluminous than in previous defense strategies.

“We must resolutely point out that engaging in Taiwan independence is a road to a dead end,” said Colonel Wu, who was joined by several senior military officials to detail aspects of the new strategy document. “If anyone dares to try to split Taiwan from China, the Chinese Army will certainly not hesitate to fight and resolutely defend the sovereignty, unification and territorial integrity of the country.”

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2019-07-24 06:19:02Z
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South Korea sends overpowering military message to China, Russia, and North Korea - Washington Examiner

Firing more than 350 rounds in warning off a Russian radar aircraft that twice entered its airspace on Tuesday, South Korea signaled its resolve to Russia, China, and indirectly, also North Korea.

The use of force was proportionate to the Russian action. With two separate incursions into South Korea's airspace, the Russian Air Force showed wanton disregard for Seoul's sovereignty and its rights under international law. Even by Russian standards, this action was extreme. But the context matters.

Operating alongside the Chinese air force, the Russians intended to intimidate South Korea and Japan and aggravate the United States. Fortunately, the South Korean military has sent a rather unmistakable warning that this kind of incident should not reoccur.

The U.S. should welcome this courage. The evolving Chinese-Russian alliance intends to undercut the American-led democratic international order. It requires riposte wherever it figuratively or literally (as in this case) crosses the line.

But the Russians were somewhat stupid here. After all, China will likely be unhappy with the excessive Russian aggression. That's because Beijing wants to limit Seoul's increasing association with the broader U.S. security umbrella in Southeast Asia. But Russia's aggression will only encourage Seoul to do the opposite and double down on U.S. support, especially in air and missile defense capabilities: two areas Beijing is desperate to see Seoul avoid.

South Korea has also sent an indirect message to North Korea. Kim Jong Un, even before taking the leadership reins in Pyongyang, has regarded Seoul as a malleable foe to be corralled by threat and dominated by force. South Korean President Moon Jae-in has sometimes reinforced this perception by supporting appeasement in face of Kim's escalation. But Tuesday's action will force the North Koreans to reassess that understanding.

In short: Well done, South Korea.

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2019-07-23 18:03:00Z
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US warship may have downed second Iranian drone in Strait of Hormuz, officials say - Fox News

U.S. officials believe not one but two Iranian drones were downed by a U.S. warship transiting the Strait of Hormuz last week, Fox News confirmed Tuesday.

One official said sailors and marines aboard USS Boxer, a large amphibious assault ship, could see one of the drones go down Thursday. The other drone disappeared from radar and was believed destroyed.

NEW MARINE CORPS ANTI-DRONE SYSTEM USED TO TAKE DOWN IRANIAN DRONE

Both drones were taken out by a new Marine Corps anti-drone jamming device strapped to the deck—without firing a shot.

Iran has previously denied the claim that a U.S. warship destroyed its drone, releasing on Friday what it said was video proof that the drone had returned to base undamaged.

President Trump on Monday refuted Iran’s claims U.S. forces had not destroyed its drone.

“There's a lot of proof -- it's called take a look at it on the ocean floor. Take your scuba gear and go down there," the president said sitting next to Pakistan’s prime minister Imran Khan in the Oval Office.

US-IRAN TENSION: A TIMELINE OF KEY EVENTS

Last week, Trump said the USS Boxer took defensive action after an Iranian drone came within 1,000 yards of the warship and ignored multiple calls to stand down.

Trump blamed Iran for a "provocative and hostile" action and said the U.S. responded in self-defense. But Iran's foreign minister, Mohammad Javad Zarif, told reporters as he arrived for a meeting at the United Nations that "we have no information about losing a drone today."

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The Iranians and Americans have had close encounters in the Strait of Hormuz in the past, and it's not unprecedented for Iran to fly a drone near a U.S. warship.

The incident last week was the latest in a series of events that raised U.S.-Iran tensions since early May when Washington accused Tehran of threatening U.S. forces and interests in Iraq and in the Gulf.

Fox News' Bradford Betz and The Associated Press contributed to this report.

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2019-07-23 18:37:45Z
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Trump Afghanistan remarks suggesting US military could end war in 10 days draws Afghan call for explanation today - CBS News

Kabul, Afghanistan -- The Afghan government asked Tuesday for clarification of President Donald Trump's statement that the U.S. military could end the war in Afghanistan in 10 days, but that the country would be wiped out in the process. Mr. Trump suggested on Monday, in a seemingly off-hand remark, that he could order such a military intervention in lieu of a peaceful resolution to the 18-year-war that began with the U.S.-led invasion to topple the Taliban.

Mr. Trump made the remarks Monday during a meeting with Pakistani Prime Minister Imran Khan, whose help he seeks in negotiating a peace deal with the Taliban that would enable U.S. forces to withdraw from Afghanistan.

Mr. Trump said he could win the Afghan war in just 10 days but it would also wipe "Afghanistan from the face of the earth."

Afghanistan: The way forward More

More in Afghanistan: The way forward

"I could win that war in a week, I just don't want to kill 10 million people," Mr. Trump said. "Afghanistan would be wiped off the face of the earth," Mr. Trump said. "It would be over in literally, in 10 days, and I don't wanna go that route, so we're working with Pakistan and others to extricate ourselves."

The president did not offer any further explanation on Monday of his remarks or the reference to the hypothetical death of 10 million people. Afghanistan is home to more than 35 million people.

U.S. stops tracking how much of Afghanistan is controlled by Taliban

President Ashraf Ghani's office issued a statement on Tuesday asking for clarification on Mr. Trump's remarks and saying Afghanistan would never "allow any foreign power to determine its fate."

The statement also underlined that "cooperation and partnership with the world countries, particularly with the United States, is grounded on common interests and mutual respect."

Mr. Trump's strange remark came just as his top envoy to Afghanistan, Zalmay Khalilzad, confirmed that he was heading back to the region to try and push forward the negotiations for a peace deal with the Taliban.

One of the key points the U.S. has pushed on the Islamic extremist group during negotiations is that it must begin a direct dialogue with the Afghan government. The Taliban has refused to negotiate directly with President Ashraf Ghani's administration in Kabul thus far, dismissing it as a puppet regime of the U.S.

Khalilzad said in a tweet on Tuesday, just before arriving in Kabul, that Mr. Trump's remarks were meant to stress the administration's belief that, "there is no reasonable military solution to the war in Afghanistan, & that peace must be achieved through a political settlement."

Speaking w/ @ImranKhanPTI yesterday, @POTUS reiterated to the world that there is no reasonable military solution to the war in Afghanistan, & that peace must be achieved through a political settlement. Pakistan committed to do all it can to achieve peace.https://t.co/TKx8lAuoyt

— U.S. Special Representative Zalmay Khalilzad (@US4AfghanPeace) July 23, 2019

He said his visit to the Afghan capital would remain, "focused on achieving an enduring peace that ends the war," in addition to cementing what he called "an enduring relationship w/ Afghanistan."

The Trump administration's relations with the Ghani government have been strained at times, however, as the White House forges ahead with its negotiations with the Taliban. The Afghan leadership has been left somewhat side-lined by the process, but Khalilzad's team repeatedly stresses that any eventual U.S. peace deal with the Taliban would require the militant group to engage in direct talks with Kabul.

Mr. Trump has previously expressed frustration with the drawn-out and costly U.S. military involvement in Afghanistan, and has made clear that he wants to withdraw American forces from the country.

More than 2,400 U.S. service personnel have died in Afghanistan since the U.S.-led coalition invaded in October 2001 to oust the Taliban and hunt down al Qaeda chief Osama bin Laden.

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2019-07-23 14:32:00Z
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Jeremy Hunt: Boris Johnson will be a great prime minister - Guardian News

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2019-07-23 13:50:53Z
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