By Matthew Vassallo
As the markets continue to try and digest the current political soap opera that is the Conservative Party, it seems poignant that despite the farcical nature of recent proceedings, the Pound has actually strengthened over the weekend.
It would appear that investors’ risk appetite for Sterling increased in tandem with last week’s announcement that the now former PM Liz Truss, would be steeping down from her position and relinquishing the keys to Number 10. Whether this upturn for the Pound was a direct result of Truss’s resignation, or perhaps even a pre-empt of what her likely replacement may bring to the table, is unclear, but either way it seems the markets have made the assumption that any alternative was a better option than what was in place previously.
Whilst it increasingly looks as though it will be the former Chancellor Rishi Sunak who gets the nod, the markets will have to wait at least until alter today for any official announcement. The reason being, that whilst Mr Sunak is considered an almost dead certainty to win based on the current odds being offered by UK bookmakers, his rival and the current Leader of the House of Commons Penny Mordaunt is still actively trying to gather the required number of votes to keep her in the running beyond todays cull.
The weekend’s events intensified the need for immediate political stability, which is likely to be the bedrock of any potential upturn against the current economic forecasts, which make for grim reading.
As news filtered through that Mr Sunak had become the clear frontrunner, it was only fitting that the previous pantomime villain should enter the fray. Former PM Boris Johnson could not be silenced for long and although he and his supporters teased the prospect of a three-way leadership contest, it was soon apparent that either:
1.) Mr Johnson could not in fact find the necessary support to propel him into a serious rival to Mr Sunak?
Or
2.) Mr Johnson’s integrity & political foresight meant that whilst he was clearly the (self-proclaimed favourite) in the race, ultimately, his moral fibre led to the decision that he should humbly step aside and let the other two play it out.
We could have an announcement of Mr Sunak’s victory as soon as this afternoon – markets are usually happiest with some stability and certainty, so will the government now be able to provide this at last?