Politics and GBP
They say a week is a long time in politics. If we misinterpret this famous phrase, for the likes of Liz Truss and her increasingly forgotten Chancellor Kwasi Kwarteng it was virtually an entire tenure in office. Perhaps this is all too fresh in the rear view mirror of Conservative Party politics for a Tuesday morning. Instead let’s look at what I’m sure any of you with an exposure to GBP have been asking yourself. Do the political headlines and the surprise return of David Cameron to Cabinet mean anything for me and the currency?
Time will certainly be passing slowly for Rishi Sunak and his team as they attempt to dominate the narrative amongst the public and media alike. Rishi’s cabinet reshuffle, which now looks to be well underway, could be seen as one of two things. On the one hand it could be interpreted as a necessary reshuffle with a careful consideration for the not-so distant general election. On the other it could be interpreted as a desperate attempt to improve the fortunes of a government increasingly losing ground to the opposition and a cabinet that appears at times to be out of control. So far, yesterday, GBP has fared relatively well not feeling the risks that the less sanguine interpretation of this week’s political events could imply.
Recently we have suggested that when GBP wakes up to the prospect of a general election just around the corner, a risk-adjusted discount could be built into Sterling valuations. Attention to British politics may only help to hasten that adjustment in pricing. However, provided that the rhetoric and market interpretation of the reshuffling of the Conservative Party front bench continues to be positive, GBP may be able to hold on as it did yesterday.
Discussion and Analysis by Charles Porter
Click Here to Subscribe to the SGM-FX Newsletter
Related Insights
Daily Brief – Strong USD
Humphrey Percy
Fri 11 Jul 2025
Strong USD Those punitive tariff threats – Copper 50%, Brazil 50% and Pharmaceuticals 200% had a marked effect on USD. Bizarrely, while POTUS has been conducting his self-harming measures on the USA and the USD, he sees no contradiction in maintaining that he sees USD remaining the primary world reserve currency. A total of 22 […]
Daily Brief – Australia
Humphrey Percy
Wed 9 Jul 2025
Australia Falling inflation, sluggish economic growth, a strong currency, lower living standards and low productivity would normally easily add up to an interest rate cut by the central bank: not in Australia where it was widely expected that yesterday would indeed see a rate cut. That is because the Reserve Bank of Australia is worried […]
Daily Brief – Poland
Humphrey Percy
Mon 7 Jul 2025
Poland June 2025 will go down as a milestone for the energy sector in Poland as it was the first month that renewable energy overtook fossil fuels as a proportion of Poland’s total energy requirements. Poland is one of the highest emitting countries only behind China, Kuwait, South Africa, and Kazakhstan and despite coal consumption […]
