The British pound eased to around $1.346 after touching a two‑month high of $1.354 earlier in the week, but remained on course for a weekly gain against the US dollar. Markets have largely priced in Andy Burnham’s widely expected confirmation as Labour leader today, shifting focus to his choice of Chancellor. Reports that Mahmood is the frontrunner have reassured investors and tempered worries about a significantly more expansionary fiscal stance under Ed Miliband.
At the same time, escalating tensions in the Middle East have driven oil prices to one‑month highs, bolstering expectations that the Bank of England will maintain its tightening cycle. Markets now fully price in a rate increase in November, with a further hike anticipated by March 2027. On the data front, UK GDP grew 0.1% in May following a 0.1% contraction in April, while output over the three months to May rose 0.7%, beating the consensus forecast of 0.5%.
