GBP unmoved as Rishi Sunak edges towards PM post

Rishi Sunak, a Chancellor of Exchequer in Johnson's cabinet, emerged as a frontrunner to succeed Liz Truss as the next Prime Minister of the United Kingdom. Sunak became a new favorite after former PM Boris Johnson withdrew from the leadership race. UK media report that Rishi Sunak now has an absolute majority support among Conservative Party MPs, clearing the way for him to become the next UK Prime Minister. However, his rival - Penny Mordaunt - is not giving up yet. Her campaign runners are saying that talks with MPs over support are still on and the race is not over yet. On the other hand, there are some Conservative Party members who publicly say that the Party has lost its credibility in recent weeks and that General Elections should be called as UK people deserve to have a say after recent political turmoil.

So far, the British pound is unmoved by new political developments. GBPUSD is trading lower on the day but the move is not major and looks to be driven more by disappointing PMIs, rather than political news. Let us recall that UK services PMI dropped from 50.0 to 47.5 in September (exp. 49.0) while manufacturing PMI dropped from 48.3 to 45.8 (exp. 48.0). As both services and manufacturing sectors are contracting, the new Prime Minister will have a hard task reviving trust in the UK economy, especially following a failed bid to do so by Liz Truss, who advocated for massive tax cuts without financing secured.

GBPUSD defended the 1.1300 support zone, which acts as a lower limit of a short-term triangle pattern. This support is a level to watch along with the short-term downward trendline that acts as the upper limit of the triangle pattern (currently in 1.1350 area).

Source: xStation5