The Brief: Liz Truss’ resignation sparked a great deal of speculation as to who will succeed the former PM. Her rival during the elections, former Chancellor Rishi Sunak remains the heavy favourite. On the other hand, the Leader of the Commons, Penny Mordaunt, and former PM Boris Johnson are also in the mix to fill in the vacancy.
Why It Matters: As the country awaits its new PM, the pound gained momentum to $1.13, and the 10-year gilt yield came close to its pre-mini-Budget level. Even the FTSE 250 Index rallied by as much as 1.2%, according to Bloomberg.
Finanze® Foresights: Investor sentiment was bolstered by Truss’ admittance of her inability to deliver her party’s promises of stablising the economy. It’s too early to tell if the fiasco that trounced the already volatile markets will soon come to an end. The country is still battered by soaring inflation, higher mortgage rates and speculations of a housing market crash. Unlike Truss who inherited a recovering economy marred by escalating energy costs and the impact of the Ukraine-Russia conflict, the next PM will also fall heir to beaten-up financial markets that will keep him on his toes. Shunak, who was omniscient of the tragedy of Truss’ policies back then, is likely to win. He has pushed for affordable housing supply during the campaign and wants to carry out reforms through stricter planning restrictions.
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