Sterling is recovering some of its losses today after a brutal session
Crisis in the UK
Today will be a tough day for the Prime Minister of the United Kingdom as most of his team resigned yesterday, showing a sign of no confidence. When a vote of no confidence is called in, the Prime Minister will likely struggle. But the reality is that survival is a numbers game, and if the Prime Minister can gather more support in his corner, he may survive the biggest challenge of his political life.
As for the markets, we have more uncertainty than ever. This is because the appointment of a new cabinet could mean a set of new policies and many unanswered questions. Rishi Sunak did an excellent job during the covid crisis by keeping the UK's economy from a complete disaster, and the public was somewhat confident in his abilities to bring the UK economy out of the current recessionary environment. In addition, the Brexit agreement is again in jeopardy as Boris Johnson wants to walk away from some of the deals agreed with the EU about Northern Ireland, which created a trade war risk. Now with the new cabinet and his new team players, traders are more concerned about the government's Brexit stance.
In terms of the market price action, the Sterling is recovering some of its losses today after a brutal session. Yesterday was one of the worst days for the Sterling since February this year, as the price briefly violated the support
Author
Naeem Aslam
Zaye Capital Markets
Based in London, Naeem Aslam is the co-founder of CompareBroker.io and is well-known on financial TV with regular contributions on Bloomberg, CNBC, BBC, Fox Business, France24, Sky News, Al Jazeera and many other tier-one media across the globe.
