On Friday, September 2, the polls close at 17:00 local time. The result, which will be announced on Monday, September 5, will also have an impact on foreign exchange markets. In fact, there are quite big differences in the economic and Brexit plans of both candidates.
As secretary of the Treasury in Johnson’s cabinet, Sunak increased taxes to the highest level since the 1950s. He has already hinted that this will not change when he becomes prime minister. Lower taxes would further fuel skyrocketing inflation.
On the other hand, Truss wants nothing more than to put the knife in tax rates as soon as possible. This would give many Britons who are struggling to make ends meet a little more financial space. However, lower tax revenues make it more difficult to get the unemployment budget in order.
British pound has trouble with Truss
If the UK’s sovereign debt rises rapidly, it could undermine confidence in the pound. Also in terms of Brexit policy, a victory by Truss could be the prelude to a somewhat more turbulent period for the British currency. She was an outspoken supporter of the confrontation Johnson sought with the European Union over the lack of control over freight transport between Northern Ireland and the British mainland.
Sunak is in favour of better cooperation with Europe. That could put the pound in calmer waters.
However, according to the British betting offices, Truss has the greatest chance of becoming the new prime minister in early September. The British pound is heading into a hot, exciting summer anyway.