World leaders congratulate Boris Johnson over election victory

Trump has had tense relations with outgoing British Prime Minister Theresa May despite being hosted for a state visit. Ties were further strained this month following leaked messages by the British ambassador to Washington that referred to Trump; the official later quit.

The US president has repeatedly praised Johnson, the flamboyant former London mayor and pro-Brexit champion who has been compared to the Republican US president, a former reality television host and real estate developer known for his unconventional, combative approach to politics.

Johnson was the overwhelming favourite to win Tuesday's Conservative Party election despite a chaotic private life and a reputation for lies, exaggeration, a lack of seriousness and discipline. He replaces May, who stepped down after failing to deliver on her Brexit plan to leave the European Union.

Like Trump, Johnson has led a country-first campaign and will now lead a heavily divided nation.

Iran's Foreign Minister Mohammad Javad Zarif on Tuesday congratulated incoming British Prime Minister Boris Johnson, saying in a tweet that Tehran does not seek confrontation with London.

"I congratulate my former counterpart, @BorisJohnson on becoming UK PM," Zarif said on Twitter.

"Iran does not seek confrontation. But we have 1500 miles of Persian Gulf coastline. These are our waters & we will protect them."

"The May govt's seizure of Iranian oil (tanker) at behest of US is piracy, pure & simple," Zarif added.

MICHEL BARNIER, EU Brexit negotiator:

"We look forward to working constructively with PM Johnson when he takes office, to facilitate the ratification of the withdrawal agreement and achieve an orderly Brexit.

"We are ready also to rework the agreed declaration on a new partnership."

JOACHIM LANG, Federation of German Industry managing director:

"Threats from London of a disorderly EU exit are damaging and rebound like a boomerang...The new prime minister must commit to an orderly transition...

"If the new government in London charts the wrong course, the damage to trade with the UK and investments on the island could be swift and significant."

MARKETS:

FAHAD KAMAL, Chief Market Strategist at Kleinwort Hambros:

"Our base case is still that there will be some kind of soft Brexit but more likely that there will be a delay. Why? because there is too much damage from a hard Brexit so why would anyone shoot themselves in the foot?...

"If you look at Johnson's history he often takes different positions on the same issue... He is not really a Brexiteer in terms of his ideology, it's all about political calculation so we think he will tilt towards a pragmatic outcome."

LEIGH HIMSWORTH, Portfolio Manager, Fidelity International: "The options facing the UK remain broadly the same: a Withdrawal Agreement similar to that presented by Theresa May; a general election to win a greater majority for the Conservative party or a new referendum. "The outcome will depend on how confident Boris feels in his own political power. His support of the Leave campaign gives him leverage over the right wing while the bluster may win Labour Leave voters. His personal background may help him retain the Tory heartland. But the key question is whether he will be able to extend his charm over the Channel."

PAUL O'CONNOR, Head of UK-based Multi-Asset team at Janus Henderson Investors:

"The market response has been fairly muted so far, which is not surprising given how widely anticipated this outcome was. The pervasive uncertainty surrounding Brexit has already taken its toll on UK assets and is now somewhat priced in...

"If we look to betting markets as a guide to consensus expectations, we see a no-deal Brexit is a one-in-three chance, with investor dread of this being somewhat offset by the view that there is still a one-in-four chance that Brexit is cancelled."

DAVID ZAHN, head of global fixed income at Franklin Templeton:

"This increases our chances of a no-deal Brexit, and 10-year Gilts at 70 bps is already pricing that in. The big risk is whether he can he form a government and I think he can...

"It will be a very Brexiteer cabinet and markets are set up for that. We have roughly 100 days until Oct 31 to sort this out, it seems unlikely. We don’t see a chance of a general election as we don’t have time.

"What we have seen from new European head is that nothing will be changed. It seems like we are headed towards a no-deal Brexit."

CHRIS GRAHAM, Europe economist at Standard Chartered:

"Johnson has said he wants to renegotiate the withdrawal agreement but when the realities of what that means get explained to him, he may soften and try to get something akin to what Theresa May was trying to achieve. This will be difficult but not impossible if Ireland agrees to concessions on the backstop You may see other EU countries supporting that too...

"But if that doesn't occur towards mid- to late-September you will see Boris Johnson pivot towards no deal. He may have to go for a delay but that will be because parliament forces his hand...

"There is probably a belief that there is scope for the EU to concede some points. When they talked to Theresa May they never thought no deal was possible whereas Johnson's rhetoric shows he's is not afraid of no deal. Remember the EU, and Ireland in particular, don't want a no deal either."

EDWARD PARK, deputy chief investment officer at Brooks Macdonald in London:

"One thing you can be sure about is (Johnson) ...wants looser fiscal policy. There's been lots of talk of tax reform. Part of that is preparing for a no-deal, but ideologically he is also keen to reduce the tax burden. If we saw a no deal as more likely, he’d probably bring forward the budget.

"Sterling will be rangebound until there's more clarity on Brexit."

DEAN TURNER, UK Economist at UBS Wealth Management:

"We now estimate that the market is pricing in a 50 per cent chance of a no-deal Brexit at the end of October. We believe (this) is too high."