GBP little moved by Liz Truss resignation

[MongiIG]

As expected, the markets are little moved following the resignation of UK Prime Minister, Liz Truss. Seen by some as a slow car crash, the inevitable took neither GBP/USD nor GBP/EUR by surprise.

 

 

 

 Jeremy Naylor | Writer, London | Publication date: Thursday 20 October 2022

UK PM resignation

We've just been witnessing one of the historical moments in British history with the resignation of the Prime Minister that just took over control a couple of weeks ago.

GBP/USD

We're watching what's been happening with the reaction of sterling against the US dollar. And these are 10-minute candles that we've seen, where we've seen this rise in the price of sterling against the US dollar, it's not been a big rise. And in terms of the long-term trend, we are being supported by this rising trendline support that we've got here.

So we're currently trading 11.267 - the move is not dramatic. To some degree, I guess this is probably what's been expected.

GBP/EUR

So far as sterling against the euro, we've got sterling pulling back against the euro. It is holding above this line of support that we had established when we saw the markets back on 15 June at 11.466. Not big moves, a little bit of volatility as we see the announcement made by Liz Truss. We will now go into a caretaker government and another election will be held in the Tory party for a new leader. And then all bets are off as to what happens then.

But expectations are high, certainly amongst the Labour opposition ranks, that there will be a general election sometime sooner rather than later, so far as they're concerned. But it certainly seems that with the election having to be held by May 2024, there's not an awful lot of room in terms of time left for the next incumbent of the leader of the Conservative Party to form a government with any lasting effect.

So we'll have to see what happens, but there's not much move on the foreign exchange markets in the wake of the startling news today from number 10 Downing street.