Sterling weakened yesterday in a shambolic day for UK politics. Against the US dollar the decline was close to 1%, but there was little movement against the euro.
The Home Secretary Suella Braverman resigned following a breach of the ministerial code. There were rumours, however, that it is essentially a ploy by new chancellor Jeremy Hunt to bring more centrists into the heart of government, and indeed she was replaced by Grant Shapps, previously sacked for supporting Truss’s opponent in the leadership race.
On the economic side of the political news, however, Liz Truss committed the UK to the triple lock on pensions at Prime Minister’s Questions.
Earlier in the day, The Office for National Statistics (ONS) announced that UK inflation in the year to September was 10.1%, an increase on last month. The biggest part of that was food inflation, rising by nearly 15%, and household energy prices at 20%. Excluding those, the core inflation rate was 6.5%, up 0.6% over the month.
The final reading of eurozone inflation was fractionally lower than expected at 9.9%, but their core inflation rate is 4.8%.
Friday will be Gfk Consumer Confidence in the UK, but the more influential news before then could well be political. There is a serious chance that the Prime Minister will be ousted or resign within days, but this may already be being priced in to the markets.
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