Pound slips with Truss on the brink

Daily Currency Update

The pressure is mounting on UK Prime Minister, Liz Truss, as she fights to cling on to power amidst chaotic events in Westminster yesterday. After enduring a bruising Prime Ministers Questions, Truss's recently appointed Home Secretary, Suella Braverman, quit as it emerged that she had sent government information via a private phone. Braverman quit as a result, however her resignation letter laid bare the divisions in the Conservative Party where she issued thinly veiled criticism of Truss by saying: "The business of government relies upon people accepting responsibility for their mistakes. Pretending we haven't made mistakes, carrying on as if everyone can't see that we have made them, and hoping that things will magically come right is not serious polities. I have made a mistake; I accept responsibility: I resign."

There were rumours circulating last night that the Tory Chief Whip, Wendy Morton, had also resigned however this was later proven not to be the case. There were also reports of Tory MPs being manhandled into voting along party lines on a vote on fracking brought forward by Labour. It appears the Conservative Party are in disarray and GBP/USD has unwound the gains it has seen since Monday after new Chancellor of the Exchequer, Jeremy Hunt, abandoned Truss's economic plan. Financial markets don't tend to like uncertainty and with Truss on the brink this will likely create a headwind for the pound as there is no clear obvious replacement for her, and even with a change to current rules on how a new leader is chosen, it will still take weeks to put in place a successor should she be forced out. GBP/USD trades around 1.1225 with GBP/EUR at around 1.1470.