GBP - political events - volatility coming?

The UK is in a novel situation where the current Prime Minister has resigned but his successor has not yet been appointed. The leadership contest has continued or 2 months and the new PM will be announced on Monday.

Neither of the two candidates has served as PM previously and their policy intentions have only been stated in basic terms. The GBP could be highly reactive and volatile as new policies are debated and announced.

Note also that the probable PM, Liz Truss, is being supported by a majority of her Conservative Party’s ordinary membership. The membership have the decision. However, she was not initially supported by a majority of Conservative MP’s in Parliament. She might end up being a legitimately appointed PM who has only weak support in Parliament.

Long-term, only dramatic action is likely to respond to the current threat to the general electorate of inflation. Failure on this will make a Labour General Election victory probable in 2024 or sooner, which is likely to weigh heavily on the GBP.

Interesting question. I think the effects on forex market depends on how much you believe in fundamentals. I think it would have to be far bigger world event than change in uk prime-minister to affect global forex market. Seems like a big deal to us UK citizens, but on global scale? I think will make zero difference.

Yes, PMs’ actions are normally only affecting GBP and even then often the impacts are very temporary. But the prospect of a Starmer administration could be a continuing bearish effect, on the pound, maybe increasing as the probability rises, and I can’t see anything the Conservative government can do now to win the next General Election.

Something out of the blue could as ever be a wild-card. Let’s say Truss negotiates something independent of NATO with Putin. Or National Insurance is abolished. Or Westminster is given the vote on Scotland’s membership of the UK. That kind of thing throws everything up in the air.

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True, but it’s so difficult to assertain what fears are already priced into the market. Then you get the bad news happening and share prices etc shoot up and the fundamental analysis people say “oh, it’s a case of sell the rumour, buy the news” (or is it the other way round - you know what I mean). This is why I personally think the only news stories that reliably and significantly effect the markets are surprise events that no-one could accurately predict i.e 9/11, super-volcanoes, nuclear power-stations blowimg-up etc). This is why i’m v skeptical of trading the news. Maybe some people are good at this but I’m not.

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Sure, in fact I don’t pay any attention to news, I just react to price when it moves.