Pound hit by UK political crisis

Global stocks wavered on Friday on renewed concerns about rising interest rates while the British pound slumped over the UK’s political drama.

European stocks fell while Wall Street went from red to green after the open as investors weighed fresh company earnings and rising bond yields.

“It’s not a good look right now in sovereign bond markets and that is making things look less pretty in global equity markets,” said Briefing.com analyst Patrick O’Hare.

Sterling slid beneath $1.12 after having bounced above $1.13 on Thursday following the resignation of Prime Minister Liz Truss.

The yield on the British government’s 30-year bond, or gilt, climbed back above four percent on Friday as the Conservatives’ race to replace Truss went into full swing, with her divisive predecessor Boris Johnson among the potential contenders.

The dollar also strengthened further against the yen as the US central bank is expected to pursue its aggressive rate hikes while its Japanese counterpart continues its dovish stance.

The dollar surged almost one percent to 151.53 yen.

The yield on the 10-year US Treasury bill — the interest the government pays to borrow — has surged well past four percent.

The pound was weighed down on Friday additionally by official data showing that UK borrowing surged and retail sales slumped in September. — AFP