Pound climbing fast: UK assets buoyed by PM Sunak as Sterling hits highest level since mini-Budget
Rishi Sunak’s appointment as PM has buoyed UK assets this morning and is taking the pound towards the 1.16 level against the US dollar, the highest level since the mini-budget.
“Almost all news headlines have centred around the appointment of Rishi Sunak as next Tory leader and Prime Minister.
Discussing Sterling this morning with Morning Wire, Matthew Ryan, Head of Market Strategy at financial services firm Ebury, said: “While there was a sense of inevitability to the appointment, particularly after Boris Johnson pulled out of the leadership race over the weekend, UK assets appear to have been buoyed by the news.”
At 42 years old, Sunak is one of the youngest Prime Ministers to ever set foot in number 10, though markets still see him “as a fairly steady pair of hands, particularly when it comes to stabilising the UK economy,” Ryan said.
Sunak’s leadership credentials are yet to really be tested, but investors seem to be of the view that his largely encouraging stint as chancellor should stand him in good stead.
“This has partly helped lift the pound back towards the 1.15 level on the US dollar, and around its highest level since the mini-budget announcement,” Ryan noted.
Fiscal statement
In one of his first major announcements, Sunak has delayed next week’s Halloween fiscal statement next week until 17 November.
The Treasury said this morning: “Prime Minister Rishi Sunak and chancellor Jeremy Hunt have agreed the Autumn Statement will be delivered on 17 November with an Office for Budget Responsibility (OBR) forecast.
“It will contain the UK’s medium term fiscal plan to put public spending on a sustainable footing, get debt falling and restore stability.”
Foreign ministry James Cleverly said earlier today that Sunak may want “a little more time” before it goes ahead, while The Times is reporting he will go through the statement line-by-line with chancellor Jeremy Hunt.
Hunt not going anywhere
Moreover, in other news that the markets embraced, Jeremy Hunt will remain as chancellor under Rishi Sunak as the new Prime Minister picked a top team which finely balanced the different wings of the Tory party.
Hunt is expected to deliver the planned fiscal statement in November which is set to include a series of tax hikes and spending cuts.
Close Boris Johnson ally James Cleverly was reappointed as foreign secretary, while Right-winger Suella Braverman is sensationally back in as home secretary, after being sacked from by Truss from the role last week for a sharing department documents with a Tory backbencher.
It is believed Braverman struck a deal with Sunak to get her old job back in exchange for her Tory leadership endorsement.
Dominic Raab was made Deputy Prime Minister and justice secretary – a dual role he held under Boris Johnson – while Michael Gove was brought back as levelling up and housing secretary, after a short spell on the backbenches under Liz Truss.
Ben Wallace, a close ally of Boris Johnson, has also been re-appointed as defence secretary, Grant Shapps has been made business secretary and Sunak’s leadership rival Penny Mordaunt has been re-appointed as leader of the House of Commons.
Nadhim Zahawi has been kept in Cabinet, but demoted to party chair, and Oliver Dowden is now Cabinet Office minister and chancellor of the Duchy of Lancaster.
Jacob Rees-Mogg was forced to leave as business secretary earlier this afternoon and was the first of a series of major Truss allies to be removed from Cabinet.