GBP/USD to sink if Truss looks likely to become the next prime minister – Mizuho

In the United Kingdom, attention should be paid to the Conservative Party leadership race, set to run until September. A victory of Foreign Minister Liz Truss would weigh on the British pound, in the opinion of economists at Mizuho Bank.

GBP/USD to move in a narrow range around 1.20 in August

“The GBP/USD pair will move in a narrow range around 1.20 in August.”

“Recent polls suggest Foreign Minister Liz Truss is in the driving seat. However, there are lots of question marks about her ability to run the economy. She has called for tax cuts (and an end to tax rises) without saying how they would be paid for, for example, and she also said the UK could learn from Japan when it came to tackling inflation.” 

“Market participants will need to monitor opinion polls going forward, but it seems likely the pound will strengthen if a Sunak victory looks likely or weaken if Truss looks likely to become the next prime minister.”