Former Foreign Secretary Liz Truss named as new Prime Minister

GBP

Sterling found some relief on Monday following the news that Liz Truss had secured a Conservative majority to lead the next Tory government. Truss beat rival Rishi Sunak with 57% of the votes to become the new Conservative leader. The news to appoint Truss as the next Prime Minister provided a much needed boost to Sterling, which earlier in the day had fallen to its lowest level against the US dollar since 1985 and its lowest level for three months against the euro.

Since the announcement, the British pound has rallied by close to 0.7%. The rebound in Sterling follows reports that Truss has plans to avert an energy crisis in the UK with a £130 billion strategy to freeze annual electricity and gas bills at the current level of £1,971 or below for up to two years. This is welcomed news for GBP as the new measure can help cushion consumers from higher energy prices and ultimately support growth.

Markets will continue to monitor and digest any policy announcements made by Truss. Any policies which look to help ease the burden of the cost of living crisis will likely see Sterling rally. There is an assumption that these measures will encourage economic growth and ensure the recession forecast by the Bank of England isn’t prolonged.

Key announcements

14:00 – USD – ISM Services PMI (Aug) consensus 55.5 against 56.7