The British currency rose to $1.1402 in Asian trade after Sunak’s rival Boris Johnson withdrew from the race
The British currency rose to $1.1402 in Asian trade after Sunak’s rival Boris Johnson withdrew from the race
Sterling took support from the news on Monday Former finance minister Rishi Sunak set to become prime minister of Britain After other candidates left the race to lead the Conservative Party.
The pound was an outlier among major currencies as most other currencies weakened against the US dollar. It rose to $1.1402 in Asian trade after Mr. Sunak’s rival Boris Johnson pulls out of race Before the currency’s gain fell 0.2% to $1.1290.
Sterling’s move against the euro was sharp with the common currency falling 0.25% to 87.1 pence.
Mr Sunak, one of Westminster’s wealthiest politicians, will be asked to form a government by King Charles, replacing outgoing leader Liz Truss, who only held the job for six weeks.
Michael Brown, head of market intelligence at Caxton, said: “It looks like the announcement was well priced at this point – especially after Sterling’s remarkable gains at the Asia Open.”
“Having said that, should Mr Sunak take over as prime minister, restore a significant amount of credibility around UK policy, which is likely to limit downside for sterling assets in the near term.”
Former Prime Minister Boris Johnson ran home from vacation to see if he could enter the ballot. However, he said on Sunday that he had garnered enough support by members of the Conservative Party to go ahead with the vote, but felt he could not govern effectively “unless you have a united party in parliament.” Are”.
However, the medium-term outlook for the pound looks troubled.
John Hardy, head of FX strategy at Saxo Bank, said: “We probably have a little less chaos with Boris Johnson not running, but it’s not like Rishi Sunak has a strong program offering more horizons for the UK economy. Is.” ,
Mr Hardy said he did not see the return of the “chaos” that had sent him Pound hits record low of $1.0327 on September 26 And caused a spike in the EUR/sterling because the Bank of England and the government would send the right signal. “But I don’t see a strong steady improvement right now,” he said.
The pound fell and gilt yields rose as a fiscal plan, which included a raft of unreimbursed tax cuts, unveiled by then-Finance Minister Kwasi Quarteng, fell. The so-called ‘mini budget’ eventually replaced Truss with the post of prime minister.