GBP climbs as new UK PM Rishi Sunak settles in

[MongiIG]

Despite criticism about a cabinet appointment, the first full day of office for the new prime minister, Rishi Sunak, has been met with the second day of gains for sterling.

 Jeremy Naylor | Writer, London | Publication date: Wednesday 26 October 2022

GBP/USD is now back to the point it was at when Liz Truss first took up the job eight weeks ago, and is being supported by an uptrend in GBP/EUR.

As the UK's new prime minister Rishi Sunak has his first full day as the leader of the UK's parliamentary party, the Conservatives, we've seen an improvement in sterling's performance against a basket of currencies.

GBP/USD

I want to take a look first of all against the US dollar.

Now look, I know the US dollar is pulling back in the markets which does give sterling an extra lift, but significantly, possibly today we are now at the levels we were at when Liz Truss came to power just a matter of weeks ago in the beginning of September.

This ellipse I've drawn here is the point the markets were at at that point in time and you can see this lift now brings us up to those levels once again. So there is a big recovery from the lows we had when Kwasi Kwarteng got up to speak and gave his first and only mini-budget or fiscal statement. Since then the markets have been appreciating the move.

GBP/EUR

Now, as I said, the US dollar is on the way down. So the better way to look at this possibly is with sterling against the euro.

Now we've got this rising line of support in place here. We got the second day of gains. Again, the ellipses where we saw Liz Truss take over. So we are yet to achieve that level of 11,632 is turning against the euro. But, nonetheless, we are still long on this at 11,550, like against the US dollar.

If you are long on this market, you'd be putting your stop below yesterday's low point of the candle, around about the 11,400 level, with a view to taking it up at least to this line at 11,632 which coincides with the 100-period moving average.

So, Rishi Sunak in his first full day in office, sterling game for a second day in a row.