The somewhat lethargic attempt to replace outgoing Prime Minister of the United Kingdom Boris Johnson has come to an end, and Liz Truss has been inaugurated by the current government as the Prime Minister who will replace Boris Johnson.
The result of this selection process concluded yesterday to a varied discourse among the business community and the electorate, however it has been marked by the already flagging British economy having reached an unenviable milestone, this being the British Pound having sunk to its lowest point in 20 years.
Although the value of the Pound against its major peers turned around on Monday, reversing some of its earlier losses to return to the flatline, it still languishes at 1.16 against the US Dollar today, having risen only slightly from the upper end of the 1.15 range yesterday which is its lowest value in two whole decades.
Faced with inflation that may reach 20% by January, and a total lack of confidence in the economic conditions in the United Kingdom by many investors and a large proportion of the cash-strapped public who have seen the national coffers plundered during the period in which Boris Johnson was in office to the tune of hundreds of billions on lockdown-related schemes, green initiatives and his voluntary involvement in the geopolitical turmoil facing Russia and Ukraine.
It appears that the overall global FX market has become used to the similarly escalating levels of inflation across Europe and North America, and have begun to focus on specific differences between these economic centers rather than on a common issue surrounding inflation which affects all of the West relatively equally.
Therefore, the volatility in the currency markets that is surrounding the majors is stemming from another set of metrics, because if it was all about inflation, there would be similar considerations on all currencies and therefore not much volatility..More info: blog FXOpen