The British pound rebounded toward $1.33 after earlier touching its lowest level since March, as markets responded to Prime Minister Keir Starmer’s resignation, which set the stage for a change in UK leadership. The move came after Greater Manchester Mayor Andy Burnham won a by-election last week, securing his return to Parliament. Burnham subsequently announced his intention to seek the premiership.
Prospects for a smoother leadership transition strengthened when Wes Streeting, previously seen as a potential rival, publicly endorsed Burnham’s bid. Investors are now focused on the implications for the UK’s fiscal outlook and are seeking greater clarity on Burnham’s policy stance, as concrete details remain limited.
A central concern is the risk of higher gilt issuance to fund increased public spending, which could further pressure the UK’s already fragile public finances and add to its elevated debt burden.
