Sterling Rises as Liz Truss Steps Down After 44 Days in Office

Sterling Rises as Liz Truss Steps Down After 44 Days in Office

Updated: 1 month, 10 days, 12 hours, 12 minutes, 44 seconds ago

Liz Truss resigned from her position as U.K. prime minister after a 44-day stint that rocked the country’s sterling and gilt markets.

The outgoing crypto-friendly prime minister stepped down after calls from at least twelve members of the Conservative Party.

Truss tax-cut effects on gilt and sterling

Later in her address, Truss said she would remain in office until another leader was chosen. The leader will be selected through a leadership election on Oct. 28, 2022. Former Chancellor of the Exchequer Rishi Sunak, House of Commons leader Penny Mordaunt, or one of several other leaders could end up with the top job.

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Additionally, Truss has officially told His Majesty King Charles III of her resignation.

I recognise however that, given the situation, I cannot deliver the mandate on which I was elected by the Conservative Party.

I have therefore spoken to His Majesty The King to notify him that I am resigning as Leader of the Conservative Party.

— Liz Truss (@trussliz) October 20, 2022

The U.K. gilt and sterling markets reeled after the prime minister announced unfunded £45bn tax-cut program. After the “mini-budget” announcement that cut tax for wealthy Britons from 45% to 40%, the sterling fell sharply. Later, the mini-budget also badly affected pension funds dependent on the gilt markets, causing the Bank of England to step in as a “market-maker of last resort.” After the mini-budget, Truss fired her former chancellor Kwasi Kwarteng. Later, Home Secretary Suella Braverman was also forced to resign on Oct. 19, 2022.  

After Truss’ announcement, ten-year yields rose to 4.18% and sterling rallied 5% to $1.1278. Gilts remained elevated after a previous rally when Truss axed her tax-cut plans.

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Accordingly, one Twitter trader, trader1sz, confirmed that the bottom was in for the U.K. currency. Having the currency bottom in means that the sterling has has already reached its lowest point during this market cycle and can only go up.

Sterling bottom is in https://t.co/LSZiRIyy8t— TraderSZ (@trader1sz) October 20, 2022

After the announcement, Bitcoin rose about 0.6% to $19,311, and Ethereum rose nearly 1% before dropping to $1,304.

Pro-crypto Truss out, future uncertain

Crypto industry pundits welcomed Truss into office on Sep. 6, 2022, hoping she would offer a light regulatory touch. She hinted at a more complementary approach to crypto in a 2018 tweet that gave the crypto industry reason to hope:

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We should welcome #cryptocurrencies in a way that doesn't constrain their potential. Liberate free enterprise areas by removing regulations that restrict prosperity. #PolicyExchange #futureoffreedom #shakeup— Liz Truss (@trussliz) January 30, 2018

As Secretary of State for International Trade under former British Prime Minister Boris Johnson, Truss founded a trade network that she thought could benefit significantly from blockchain technology.

“We want to achieve a world-leading data and digital agreement, underwriting data flows but also dealing with issues like blockchain and artificial intelligence, thereby making sure that we and the U.S. are leading the world and able to share these economic opportunities,” she said at the time.

After Truss resigned, the future of crypto in the U.K. is uncertain. As one trader put it, the U.K. could be in for a rough period:

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Feels like UK could go in chaos mode soon. https://t.co/kwrrk4aqrn— doncrypto (@DonCryptoDraper) October 20, 2022

The Financial Services and Markets Bill, currently under committee debate in the House of Commons, may be put on the back burner. The next sitting for the discussion is scheduled for Oct. 26 and Oct. 27, 2022. The bill deals with stablecoin regulation in the U.K. The bill will only allow U.K. citizens to use reserve-backed stablecoins. 

Future crypto regulation may depend on whether the new Prime Minister will keep the current chancellor Jeremy Hunt. Hunt will deliver a plan on Oct. 31, 2022, to fund Britain’s public accounts with £40bn.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here

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