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 – EU Stagflation
Humphrey Percy
Mon 25 Nov 2024
EU Stagflation With inflation blipping up and business activity turning down, the S word is back on the table. Not only manufacturing but also the services sector fell sharply in November with the Purchasing Managers Index at its lowest level this year. The EUR facing a rampant Dollar is increasingly undermined by its own weakening […]
Daily Brief – UK Housing Market
Humphrey Percy
Mon 9 Dec 2024
UK Housing Market Best performance in the past two years etc etc with the Halifax average house price up 4.8% as at the end of November. Without being curmudgeonly or seasonally Scroogelike the real house price performance allowing for inflation in the last 2 years is minus 10.5% for all those mistakenly regarding their house […]
Daily Brief – UK Equities
Humphrey Percy
Fri 6 Dec 2024
UK Equities We wrote recently about a European wide Santa Rally in Equities despite the political headwinds in Continental Europe, but it looks as if the UK market has finally managed to break out on the top side of its range and without wishing to jinx it, may be set fair. One well known Fund […]
