Pound hits six-week high as Sunak becomes prime minister | Business news

The pound hit a six-week high as Rishi Sunak became prime minister today, another sign that markets are welcoming the country’s new leader.

Sterling rose 1.8% against the dollar to $1.147, having risen 1.92% to $1.150 earlier in the day, its highest level since September 15.

The pound was hovering around $1.11 on Friday afternoon as reports emerged that Boris Johnson was plotting a political comeback to challenge Mr Sunak.

Mr Sunak is a well-known figure in Britain’s financial sector, having been chancellor for two years under Mr Johnson and before that a former Goldman Sachs analyst and hedge fund partner, and it is hoped his administration will support markets.

He comes to the top job after Liz Truss announced big tax cuts late last month, spooking investors and triggering a massive sell-off in government bonds that prompted the Bank of England to intervene.

The appointment of Jeremy Hunt as chancellor, replacing Kwasi Kwarteng, calmed the situation to some extent as Mr Hunt abandoned virtually every policy announced in the Truss-Kwarteng mini-budget.

Long-standing yields on gilts, which were at the center of the post-mini-budget chaos, are almost back to where they were before, reflecting rising investor confidence.

Looking ahead, Mr Hunt said on Twitter on Tuesday: “It’s going to be tough.

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“But protecting vulnerable people – jobs, mortgages and bills – will be the focus as we work to restore stability, confidence and long-term growth.”

Jordan Rochester, a strategist at Nomura, told Reuters: “Every new leader tends to have a honeymoon period, and Liz Truss didn’t last long.

“The question will be how long will this honeymoon last for Rishi Sunak?

“We think he has a better understanding of the financial markets than Liz Truss – with his experience – and that he will allow Jeremy Hunt to continue with this ‘austerity budget’ that we will get next week on October 31.

“It will appeal to the market.”

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Commenting on the development of the pound on Tuesday, he added: “There is a whirlwind of potentially good news in the short term, but markets are not ignoring the fact that global growth is slowing in the medium term and the dollar will be in demand. “

Miles Selich, chief executive of financial lobby group The City UK, told Reuters: “Policy stability is very important. The constant radical swing of the political pendulum is something that does not help any country.”