FX.co ★ Sterling Falls After Burnham Takes Office

The British pound slipped to about $1.342 on Monday as investors reacted to the appointment of Andy Burnham as the UK’s new prime minister and continued to weigh the monetary policy outlook. Burnham, who succeeded Keir Starmer unopposed, is the country’s seventh prime minister in a decade and the second since Labour returned to power in 2024. He reiterated his commitment to the existing fiscal rules but indicated he is considering an increase in the income tax personal allowance, which has been frozen in recent years. Market focus has now turned to his choice of chancellor, with Shabana Mahmood widely reported as the frontrunner. At the same time, elevated oil prices are sustaining inflation concerns, bolstering expectations that the Bank of England will keep interest rates higher for longer.