GBP to remain stable until the new Prime Minister is announced – ANZ
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UK financial markets have responded well to the resignation of Liz Truss as Prime Minister. Economists at ANZ Bank expect the pound to remain stable until the announcement of the new PM.
“We expect the GBP to remain stable until the new Prime Minister is announced, after which the focus will be on the fiscal statement on 31 October, and the Bank of England meeting on 3 November.”
“Up to three candidates can be nominated in the party’s leadership race, with only two going to membership. It is likely that the new leader will be announced by the end of next week. However, if only one candidate is nominated, that may result in an earlier announcement.”
“The BoE next meets on 3 November. After underwhelming the markets in previous months, we expect the BoE will have to raise rates by a minimum of 75 bps and possibly 100 bps. We think a 75 bps rise will also be warranted in December. Failure to deliver a comprehensive and credible rate rise supported by appropriate hawkish forward guidance could see GBP come under renewed selling pressure.”
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