In light of news that former Chancellor Rishi Sunak has secured the MPs’ vote to become the UK’s next prime minister, Giles Coghlan, Chief Market Analyst, HYCM, said
“The past three weeks have been nothing short of chaos in Westminster. With Rishi Sunak named as the UK’s third prime minister in three months, the question now is whether today’s events will mark the beginning of a turn higher for the GBP as confidence returns in the Government’s fiscal plans. “Already, the markets have stabilised on the expectation that Sunak may be able to restore the UK’s finances. Before today’s announcement, the pound rallied higher at $1.13 on Monday morning as Boris Johnson exited the leadership contest, while the FTSE 100 started the day with a 0.5% boost, bringing it above the 7,000-point mark for the first time in a week.
This renewed confidence means that investors are now pricing in a slightly less hawkish hike from the Bank of England, just under 5%, lower than the 6% expected in the aftermath of the Government’s disastrous mini-budget. Ultimately, this could mean cheaper mortgage repayments for homeowners. “However Sunak’s premiership unfolds, there are likely to be more difficult times ahead for the UK economy as it grapples its way out of a worsening downturn and even the prospect of a general election – upheaval which could derail the markets further. “That said, there is one aspect of help for the GBP that is often overlooked. On the other side of the Atlantic, a slowdown in Federal Reserve policy would likely help lift the GBP as much, if even not more, than UK fiscal policy.”
Personal finance and energy expert Mohsin Rashid, Co-founder of ZIPZERO says;
“The arrival of Rishi Sunak into Number 10 is an incredible moment for British diversity. He enters as the first person of colour to become Prime Minister of the UK. Unfortunately, he also enters six weeks too late.
“In the summer, Sunak lost because he sold a tougher, more economically responsible, future to the nation. The near self-inflicted collapse of the British economy means that that future could be even graver. Within this rigid framework, Sunak must find room to support families.
“The impact of rising energy prices is affecting every corner of the country. We have seen reports of the most vulnerable no longer being able to afford to take the bus to work or enjoy the luxury of a kettle. Modern Britain is becoming numb to such bleak tales. Sunak must reinstate compassion at the heart of government and develop a support package with long-term aspirations.”