Liz Truss resigns as PM: What You Need to Know | Daily Market Analysis

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British Prime Minister Liz Truss announced her resignation on the 45th day of her premiership. The announcement followed a meeting between the prime minister and Sir Graham Brady, chairman of the 1922 Committee, which represents the conservative party's parliamentary faction. According to British media reports, during the meeting, Sir Graham told Mrs. Truss that she could no longer count on the support of a majority of Conservative Party MPs. A new head of government will be chosen within a week.

Thus, Liz Truss broke the record of short tenure as Prime Minister of the country, held for 195 years, when in 1827 Prime Minister George Canning died 119 days after taking office.

Liz Truss took office in early September of this year. Her main problem has been her attempted tax reforms, which have provoked a sharp decline in the stock market, the national currency, and confidence in the government. This week, Mrs. Truss dismissed Finance Minister Kwasi Kwarteng, appointing a vocal opponent of the reforms to replace him. The situation has been exacerbated by an open rebellion within the parliamentary faction of the Conservative Party, many prominent members of which have openly opposed the prime minister.

The situation of Mrs. Truss became virtually hopeless after last Wednesday's events when Interior Minister Suella Braverman resigned. While the occasion for her resignation was a purely technical breach of paperwork (Ms. Braverman had sent a classified government document using her private e-mail account), in the words of the former minister, "when we make mistakes, we have to resign." These words were seen as a direct criticism of the prime minister.

Elections for a new party leader will be held within a week. The most likely successor to Ms. Truss is former Finance Minister Rishi Sunak, who lost the previous election for party leader this summer.

Overall, British investors reacted positively to the politician's decision to leave her post. In addition, her government's plan for the country's budget caused serious turmoil in the market, which even led to the reaction of the Bank of England.

After Truss's announcement of her resignation, stocks, bonds, and the pound sterling began to strengthen their positions. Financial markets recorded the following data:

● The FTSE 100 Index, which includes stocks of the 100 largest companies by market capitalization on the London Stock Exchange, rose 0.27%;

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● The FTSE 250 mid-cap index reacted to the news up 0.3%;

● The British pound rose 0.5 percent against the U.S. dollar. According to the BBC, the pound rose to $1.13 at some point.

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Add that two days after Truss led the British government, the pound fell to its lowest level in almost 40 years.

In general, the British currency has been steadily rising since the beginning of trading on Thursday, as the British media released information that representatives of the Conservative Party are pressuring Truss to step down.

At the same time, the yield on 10-year government bonds fell to 3.82, though the securities started the trading day at 4%. These assets have also been known to move in the opposite direction from the price movements of conventional bonds.

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