Truss, Sunak move a step forward to become UK’s next PM

Following Wednesday’s voting, Penny Mordaunt has been knocked out of the Conservative leadership contest, leaving Rishi Sunak and Liz Truss to face each other in the run-off to replace Boris Johnson.

The winner of the final round is expected to be announced on Monday, September 5, following a postal ballot completed by 160,000 Tory party members.

This development does not have an immediate impact on the sterling’s valuation. The GBP/USD pair was trading flat on the day at 1.1995.

The GBP/USD pair is hovering around 1.2000, around the same level it closed on Tuesday. The pair bottomed on European hours at 1.1954 and then rebounded to the 1.2000 area.

For the third consecutive day, GBP/USD failed to break the 1.2030/40 area and weakened. The current tone favors a correction that could face support at 1.1950 and 1.1920.

Earlier on Wednesday, inflation data in the UK showed the annual CPI rate rose to 9.4%, above the 9.3% of market consensus, hitting the highest level in 40 years. The numbers did not trigger a reaction in the pound. A 50 basis point from the Bank of England at the August meeting is fully priced in.