Twenty economists polled all expected the British central bank’s nine monetary policymakers to vote unanimously in favour of keeping borrowing costs unchanged at Thursday’s monetary policy meeting.
While policymakers have said that benchmark interest rates may need to rise sooner than markets expect, traders are in no hurry to shift their expectations, with futures markets pricing in no rate hikes until well into late 2020.
The British currency had dropped to its weakest since January against the euro and dollar earlier in the session, as investors worry that Johnson could put Britain on a path towards a disruptive no-deal Brexit.
Johnson, the face of the campaign to leave the European Union in the 2016 referendum, won 126 of 313 votes, by far the largest number in the second round of voting for Conservative Party leader, with four other candidates also getting through.
Sterling stood at $1.2551, up 0.1% on the day and unchanged from before the results were announced.
Against a euro weakened by European Central Bank signals of looser monetary policy, the pound stood 0.3% higher, at 1.1206, albeit still near five-month lows touched earlier on Tuesday.
UBS wealth management said it believed fears of a no-deal Brexit at the end of October were overdone.
“UBS’s base case is a further extension of the October deadline and eventually general elections in the UK, which should keep the exchange rate GBPEUR in a range between 1.1200 – 1.1500 over the coming 12 months,” its chief investment office said in a research note to clients.