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Oct 20 - 11:55 AM

GBP/USD - COMMENT-Sterling Bulls Run Into Offers Above 1.13 After PM Truss Exits

By Paul Spirgel  —  Oct 20 - 10:00 AM

Sterling rallied on Thursday above 1.13, up from overnight lows at 1.1172, ahead of British Prime Minister Liz Truss' resignation speech, though bulls were unable to add to gains, and uncertainty over the UK leadership race along with inflation and growth problems could contain the pound.

The resignation followed weeks of financial and political turmoil generated by adverse market reaction to her government's "mini-budget", which triggered a gilts crisis and sent GBP/USD plummeting to all-time-lows at 1.0327.

Sterling and gilts have stabilized to await results of the Tory leadership election, expected to be concluded ahead of the key Oct.
31 fiscal statement.

Market attention will focus on former finance minister Rishi Sunak, who lost to Truss in the last leadership campaign.
Other potential candidates are leader of the House of Commons Penny Mordaunt and defense secretary Ben Wallace, with some bookmakers seeing former PM Theresa May and even Boris Johnson as potential candidates.

Thursday's rally notwithstanding, the road ahead for GBP/USD bulls remains bumpy as considerable UK inflation-recession angst, even with regime change, shows little sign of abating in the near-term.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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