(Kitco News) - British parliament is set to have its third Prime Minister in less than two months with former finance minster Rishi Sunak now tasked with leading the nation that faces tumultuous economic conditions.
The former millionaire hedge fund manager secured the leadership role after his only opponent Penny Mordaunt, failed to get enough lawmakers to back her name on the ballot.
Sunak’s biggest rival was former Prime Minister Boris Johnson, who withdrew his name from the race Sunday, saying that he could no longer unite the party. Sunak was Johnson’s finance minister but he resigned from his post in July, citing economic policy differences with his boss.
The leadership news is not having much impact on gold prices as it sees solid losses against the pound sterling. Gold last traded at £1,456.15 an ounce, down nearly 0.5% on the day.
The news is not providing much relief for the pound as it remains at session lows against the U.S. dollar, last trading at £1.1287, down 0.10% on the day.
Sunak will replace former Prime Minister Liz Truss who resigned after only 44 days in office. She was forced to resign after her plan of unfunded tax cuts caused a massive selloff in British gilts.
According to some political analysts, Sunak expected to announce significant budget cuts in an attempt rebuild Britain's fiscal reputation. The cuts will come as the nation continues to slide into a recession with slower economic growth and rising food and energy costs.
Many markets analysts have said that Sunak will face some difficult challenge in the weeks and months ahead.
“The reversal of the Kwarteng/Truss simply brings the U.K. back to where it was on September 22, the day before the mini-budget was announced,” said currency strategist at Brown Brothers Harriman.
Sunak will also be the United Kingdom's first Prime Minister of Indian heritage. At 42, he will also be one of the youngest PMs in more than a century.
Not all British politicians are supporting the new Prime Minster. Members of Labour have reiterated their call for a general election, as have the Scottish National Party and the Liberal Democrats.
