The Pound Sterling edged higher after Theresa May was appointed as the heir apparent to David Cameron, the outgoing UK Prime Minister. As the UK’s current minister of interior affairs, May’s appointment has generally improved sentiment among the globe’s financial markets. Analysts say that the appointment has helped provide some clarity on the leadership of the UK government which did much to improve investors’ appetite, especially given the Prime Minister’s resignation and Wednesday departure.
As reported at 10:57 am (BST) in London, the GBP/USD was trading 1.44% higher at $1.3184, just off the peak price of $1.3188 in the session; the pair had earlier hit a low of $1.2970. That was the largest single day’s gain since Britain voted to withdraw from the E.U. The EUR/GBP was down 0.98% at 0.8426 Pence; the pair has ranged from 0.8420 Pence to 0.8524 Pence in today’s trade.
UK Economic Outlook Dismal
Despite the appointment, analysts caution that the triggering of Article 50 could present some unexpected reaction from investors which could put more pressure on the Pound Sterling. Moreover, analysts expect a recession ahead for the UK economy, suggesting that the Bank of England is likely to maintain an overly dovish outlook and policy which will also weigh on Cable.