Sterling dips after UK PM Truss resigns

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In this photo illustration, U.S. dollar bills are pictured with British coins, September 27, 2022, Bath, UK. /CFP

The sterling edged lower on Friday as investors digested the news that British Prime Minister Liz Truss had quit after just six weeks in office.

The pound dipped 0.21 percent to $1.1215 in early Asian trade, after a brief rally to a high of $1.1338 in the previous session, after Truss announced her resignation.

"I think that was a knee-jerk reaction to at least a temporary easing of UK political uncertainty... I think markets for now are pretty happy about the news," said Carol Kong, currency strategist at Commonwealth Bank of Australia.

"But the news that we heard only removed some, but not all of the political uncertainty in the UK economy, and we'll still hear more on the fiscal policy front at the end of this month."

Truss was brought down by an economic program that sent shockwaves through markets and shattered the country's reputation for financial stability.

The Conservative Party, which holds a big majority in parliament and need not call a nationwide election for another two years, will now elect a new leader by October 28 – Britain's fifth prime minister in six years.

Meanwhile, the euro fell 0.15 percent to $0.97725, after tracking the move in sterling to an overnight high of $0.98455.

(Source: Reuters with edits)