The pound slid toward $1.35, retreating from the near two-month highs reached last week, as political instability in the UK intensified. More than 70 Labour MPs have called on Prime Minister Keir Starmer to step down after the party’s weak showing in last week’s local elections, stoking investor concerns that any change in leadership could usher in higher fiscal spending as the party seeks to win back voter support.
At the same time, lingering worries over the fragile US–Iran ceasefire pushed Brent crude above $105 a barrel, after US President Trump rejected Iran’s latest response to peace proposals as unacceptable. The heightened uncertainty has led investors to ramp up expectations for additional Bank of England rate hikes, with markets now pricing in nearly three more increases before the end of the year.
