FTSE 100 and Pound Sterling dip but then rally on Liz Truss resignation
FTSE 100, GBP/USD and EUR/GBP reaction to Liz Truss resignation.
Liz Truss resignation
Liz Truss, the British prime minister, resigned at 1.30pm British summer time (BST) after just 45 days in office, making her the shortest-serving prime minister in the UK, following the quasi-total evaporation of her political authority after she lost two key ministers in quick succession.
Following last week’s sacking and replacement of the then Chancellor of the Exchequer, Kwasi Kwarteng, this week’s resignation by the Home Secretary, Suella Braverman, for breaching the ministerial code, made Liz Truss’ position untenable.
The 1922 Committee chair Sir Graham Brady, announced that a new leader will be in place by 28 October, just before the scheduled fiscal statement by the new Chancellor of the exchequer, Jeremy Hunt, and that he expects Tory members to be involved in choosing a new party leader while the opposition calls for a general election.
By the end of October, the UK will thus have had its fifth Tory prime minister in six years
Financial market impact of prime minister’s resignation
FTSE 100 initially drops 0.5% but then rallies on Liz Truss resignation
The FTSE 100 gave back all of its Thursday morning gains by dropping 0.5% on Liz Truss’ resignation before regaining all of its losses within a couple of hours.
The index slid back towards the 6,900 mark, to levels traded on Wednesday, but found support along its breached September-to-October downtrend line which, because of inverse polarity, acted as a support line from where it then rallied.
Below it, support can be spotted at the 6,783 early October low. While it underpins, the recent advance may well continue with minor resistance at the psychological 7,000 mark remaining in focus. A rise above Tuesday’s high at 7,018 would target the early September low and the early October high at 7,104 to 7,131.
GBP/USD probes and then bounces off technical support on UK prime minister resignation
GBP/USD slid back from its near $1.13 Thursday morning high to around the $1.1250 zone, or by close to half a percent, on Liz Truss’ resignation and thus revisited its September-to-October uptrend line before bouncing off it and recovering strongly.
Only a fall through Thursday’s intraday low at $1.1172 may lead to the minor psychological $1.10 mark being revisited. Below it last week’s low at $1.0924 can be found. If also fallen through, the 27 September high at $1.0838 would be targeted.
Resistance remains to be seen along the August-to-October downtrend line at $1.1388 and at this week’s high at $1.1439 as well as at the early October peak at $1.1495.
EUR/GBP hardly affected by UK prime minister resignation
EUR/GBP had already been sliding from its Thursday intraday high at £0.8557 before the UK prime minister, Liz Truss, resigned, and simply continued on its downward trajectory.
The early October low and 55-day simple moving average (SMA) at £0.8649 to £0.8644 are thus back in focus with further support being seen at the early September trough at £0.8567.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
