The pound tumbled against the dollar on Friday in an ultra-volatile market as Finance Minister Kwasi Kwarteng was sacked from his post, according to British media.
On the bench after only 38 days in power, British Prime Minister Liz Truss will give a press conference on Friday afternoon, following the hasty return to London of her Chancellor of the Exchequer amid a crisis caused by the controversy government budget measures.
Political instability in the country weighed on the pound, which lost 1.20% to $1.1188 and 0.59% against the euro at 86.84 pence around 12:00 GMT (2:00 p.m. hours in Paris), the day after a rally in the pound sterling on speculation of changes in the fiscal policy of the United Kingdom.
If investors were satisfied on Thursday with the press information that evoked a possible radical change by the government in its budgetary measures, Kwarteng’s departure adds to the lack of continuity of economic policy on the other side of the Channel, where the appointment of ‘a fourth chancellor in four months is now expected.
The pound is fighting against the dollar.
In the bond market, yields on 10-year notes slipped slightly to 3.98%, a sharp drop from Tuesday, when they peaked at 4.64%. Also, the pound is struggling against a healthy dollar. The yen fell 0.44% to 147.78 yen per dollar after rising to 147.88 yen, a new low since 1990.
Currency traders are leaving the yen en masse due to the divergence in monetary policy on both sides of the Pacific: the Bank of Japan maintains a very loose monetary policy while Japanese inflation is below 3%.
In the United States, on the other hand, inflation was persistent in September, falling very slightly in one year to 8.2%, which should encourage the US Federal Reserve (Fed) to raise its rates faster and faster.
Finally, the Hungarian forint soared, gaining 2.37% against the euro at 418.53 forints, moving away from its record low reached the previous day at 432.22 forints.
The Hungarian Central Bank had spooked the markets by not raising its rates at the end of September, despite inflation reaching a one-year high of 20%, and the currency having plunged 6% in two weeks since this decision. Signal received by the Bank: one of its leaders hastened to announce, from Washington, a marked tightening of its monetary policy, causing a rise in the guilder.
Source: BFM TV
