Daily FX Market Review: GBP Pounds the Bears After New Prime Minister is Confirmed

The British pound (GBP) reached a 6-week high as a new prime minister in the UK was confirmed today.

Rishi Sunak, at 42 years old, became one of the youngest UK prime ministers ever.

He also becomes the first UK prime minister of Indian origin! 🎉

Did I mention he’s also extremely rich?💰

Rishi Sunak is UK’s third prime minister in two months. After Boris Johnson resigned in July following a series of scandals, Liz Truss became prime minister in early September but quit 44 days later, making her the shortest-serving prime minister in British history.

Why such a short time in the office? She unveiled an economic program that triggered a financial market meltdown, including causing the pound to fall to record lows, which cost her job. 💀

In his first speech, Rishi Sunakr promised to put “economic stability and confidence” at the heart of the agenda. He pledged to lead the country out of a profound economic crisis, “fix” the mistakes made by his predecessor, and…wait for it….rebuild trust in politics. 🤣

What a comedian.

After having a good laugh, forex traders liked what they heard today and rewarded his optimism by buying the pound.

We’ll see whether this bullish sentiment on GBP has any follow-through tomorrow.

Let’s review what else happened in the FX market today…

Currency Market Movers

Which currency pairs gained the most today?

As shown by our FX Market Movers page, GBP/USD was the leader of the pack, gaining 1.71% or 193 pips.  🏆

GBP/USD hit an all-time low of 1.0327 after Truss announced a package of tax cuts and spending increases on Sept. 26. So far, it has recovered 11%, but is still down over 16% so far this year.

Which currency pairs lost the most today?

EUR/GBP was the biggest loser, falling 0.78% or 68 pips! 😢

One other currency pair to note is the USD/JPY.

This currency pair was weaker today so it looks like the intervention that I talked about yesterday hasn’t failed yet.

Currency Strength

What was the overall strength or weakness of individual major currencies today?

Based on the Currency Strength Meter on MarketMilk™, GBP was the strongest currency. 💪

The U.S. dollar (USD)) was the weakest currency.

The U.S. dollar fell today against all major currencies after data showed that house prices in the US shrunk at the fastest pace on record. Such weak data renewed hope the Federal Reserve would become less aggressive in its pace of interest rate hikes

Currency Short-Term Trends

When it comes to short-term trend strength, the British pound (GBP) and euro (EUR) show the most bullish strength.

The U.S. dollar (USD), Japanese yen (JPY), and Swiss franc (CHF) are the most bearish trend strength.

Currency Volatility

Which currency was the most volatile today?

Based on our Currency Volatility Meter, it’s the U.S. dollar (USD). 

Which currency pair was the most volatile today?

Given that the USD was the most volatile currency, it has to be a USD pair. But which one?

GBP/USD. From its high to low, it moved over 2.02% or over 228 pips! 

Are you bullish or bearish on GBP/USD?

Is GBP/USD a buy or sell? Here’s what MarketMilk™ indicators say…