On Thursday 8 of September 2022, Queen Elizabeth II of the United Kingdom and other Commonwealth realms has died peacefully at her Scottish estate of Balmoral. She reigned over the United Kingdom for 70 years, having accessed the crown after World War II in 1952, as the Kingdom was rebuilding itself after the war. She oversaw the decolonisation process in many of the former colonies, the post war economic and baby boom, as well as the 2016 Brexit vote and the 2020 pandemic. The Queen saw 15 prime ministers serve during her reign, with Winston Churchill born in 1874 being her first Prime Minister, to Liz Truss born in 1975 her last. Her first and last Prime Minister were born 101 years apart, a testimony of the longevity of the second longest reign in the history of the world (only King Louis XIV of France reigned longer for 72 years between 1643 and 1715).
Her death marks a new era for the United Kingdom, one where economic uncertainty looms as effects of the pandemic and the war in Ukraine push inflation to levels not seen since the 1980s. She is succeeded by her son, King Charles III, who will be officially proclaimed King this Saturday at St James Palace in London in front of the Accession Council. He is also due to meet Prime Minister Liz Truss this Friday as the suspension of normal politics comes into place for the next 10 days until the Queen’s funeral. The government will observe a period of solemn ceremony during which no announcement will be made until after her funeral.
A few hours before the Queen’s death, Liz Truss announced her plan to fight inflation and rising energy bills as the pound sees markets lose confidence in the government’s ability to avoid recession. Wednesday, the British Pound hit a 37 year low of $1.1469, and the situation puts pressure on the new monarch Charles III and his Prime Minister to rally public sentiment behind them and address the crisis.
Yesterday also saw the European Central Bank increase its interest rates as expected by 75 basis points to 1.25% as inflation soars to 9.7% in the Eurozone. The deposit facility rate also jumps to 0.75% from 0.00%.
The dollar retreated from recent highs as a rate hike by the European Central Bank pushed the euro higher and investors await US inflation data early next week. The euro, sterling and yen were all heading for their best daily jumps in a month and the dollar index looks set to suffer its first weekly loss in four weeks.
Cable saw the pound weaken yesterday. GBPUSD opened at 1.1528 and closed at 1.1500.
GBPEUR followed a similar trend. The pair opened at 1.1523 and closed at 1.1503.
EURUSD saw the dollar break the parity line again. The pair opened at 1.0002 and closed at 0.9994 yesterday.
