FX.co ★ Pound Rebounds as Starmer Backs Reeves

The British pound made gains towards $1.37, partially rebounding from Wednesday’s drop, as market sentiment improved following Prime Minister Keir Starmer’s strong endorsement of Chancellor Rachel Reeves. Starmer defended Reeves after speculation about her position emerged, attributing her emotional state to a “personal matter” and assuring that she would continue serving as chancellor “for a very long time to come.” His statements helped allay investor concerns that a potential new chancellor might prioritize less fiscal discipline and favor increased borrowing. Meanwhile, traders were also evaluating remarks from Bank of England officials. At the ECB Forum on Central Banking, Governor Andrew Bailey noted it was premature to evaluate the inflationary effects of tariffs but emphasized that the trajectory of interest rates is “downwards.” Separately, BoE policymaker Alan Taylor advocated for more rapid rate cuts, cautioning about an elevated risk of a severe downturn for the UK economy.