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Week Ahead (3/3): Will politics move prices?

UK
  • Politics cannot be ignored and most of the weekend press coverage is of the continued “partygate” scandal. A roundup of some of the key press coverage is available here.
  • Will this have an impact on markets if there is a new PM? We tend to look at this in three ways: will there be a change in monetary policy, will there be a change in fiscal policy and will there be a change in certainty?
  • In terms of monetary and fiscal policy, both Sunak and Truss (the leading candidates) are unlikely to change economic policy substantially enough for any discerable difference in monetary or fiscal policy, so the impact would purely be on certainty. We don’t think there has been a big hit to sterling assets but we note that there could be a small short-term bounce in sterling asset prices if a new leader was seen to be able to unify the Conservative party and provide more certainty going forward.

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