By Matthew Vassallo
The expected appointment of new Prime Minster Rishi Sunak on Monday has, on the face of it at least, brought an air of much needed calm to the markets. The result of this has been reflected in investors’ increased risk appetite for GBP, with the Pound enjoying its most productive week against both the EUR & USD since outgoing PM Liz Truss began her now infamous and historical 44-day stint in office. That tenure, which has the unfortunate tag of being the shortest ever served by a British Prime Minister, certainly didn’t pass without incident. Truss’s now widely debunked vision for the UK’s economic recovery, has no doubt left its stain on the UK economy, with the Pound now trying to recover from record lows against the US dollar and levels against the Euro not seen since Brexit was announced.
Whilst the Pound continued to show signs of a potential recovery this week, any further gains may well be diluted following reports yesterday that the current Chancellor Jeremy Hunt has admitted to facing “sobering” decisions on potential spending cuts and tax rises. This is hardly a surprise considering the current economic climate but with the new PM reiterating his commitment to fiscal responsibility as he plots a route for the UK out of the economic mire, this report is only likely to serve as a stark reminder of the hardships we all face over the winter months and even beyond. With the cost-of-living crisis showing no signs of easing, as inflation once again rose into double digits last month, the current establishment is not hiding away from the fact the road ahead is likely to be rocky and uncertain to say the least.