Sterling Slips as UK By-Election Risks Weigh

2026-02-26 09:04 By Joana Ferreira 1 min. read

Sterling slipped to $1.35 as voters headed to the polls in a closely watched UK by-election that could have broader political ramifications for PM Starmer.

The contest in the Gorton and Denton constituency was triggered by the resignation of former Labour minister Andrew Gwynne.

A defeat for the ruling Labour Party would likely rekindle speculation about Starmer’s leadership, particularly after mounting pressure linked to the Peter Mandelson controversy.

Investors remain cautious that any political instability involving Starmer and Chancellor Reeves could open the door to a looser fiscal stance, heightening concerns over the UK’s debt trajectory.

Markets are also digesting fresh external risks, including US President Trump’s new 10% global tariffs and a third round of US-Iran nuclear talks in Geneva.

On the monetary policy front, traders are increasingly pricing in interest rate cuts from the BoE, following softer employment figures and continued easing in inflationary pressures.



News Stream
Sterling Slips as UK By-Election Risks Weigh
Sterling slipped to $1.35 as voters headed to the polls in a closely watched UK by-election that could have broader political ramifications for PM Starmer. The contest in the Gorton and Denton constituency was triggered by the resignation of former Labour minister Andrew Gwynne. A defeat for the ruling Labour Party would likely rekindle speculation about Starmer’s leadership, particularly after mounting pressure linked to the Peter Mandelson controversy. Investors remain cautious that any political instability involving Starmer and Chancellor Reeves could open the door to a looser fiscal stance, heightening concerns over the UK’s debt trajectory. Markets are also digesting fresh external risks, including US President Trump’s new 10% global tariffs and a third round of US-Iran nuclear talks in Geneva. On the monetary policy front, traders are increasingly pricing in interest rate cuts from the BoE, following softer employment figures and continued easing in inflationary pressures.
2026-02-26
Sterling Holds Near $1.35 as Trump’s 10% Global Tariff Takes Effect
Sterling remained little changed at $1.35, staying close to last week’s one-month lows, as US President Donald Trump’s new 10% global tariffs came into effect. Although Trump had threatened to raise the rate to 15% over the weekend, the lower-than-expected levy offers only limited relief for UK businesses. The tariffs follow a setback for Trump on Friday, when the US Supreme Court struck down his sweeping “liberation day” import duties imposed last year. Under the new measures, the US Customs agency will impose “an additional 10% ad valorem duty on imported articles of every country” for 150 days from Tuesday, unless specifically exempt. Meanwhile, William Bain, head of trade policy at the British Chambers of Commerce, noted that “while a new 10% tariff rate, instead of the threatened 15%, provides some relief, it highlights how difficult it is for businesses to plan ahead.”
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Sterling Climbs Above $1.35 on Softer Dollar
Sterling traded at $1.35, rebounding from last week’s one-month lows as the USD weakened amid renewed uncertainty over US trade policy. Over the weekend, US President Donald Trump announced plans to lift a temporary global tariff to 15% from 10%, after the Supreme Court blocked his broader tariff measures. US Trade Representative Jamieson Greer stressed existing deals, including last year’s agreement with UK Prime Minister Keir Starmer, remain in force. Yet Andy Haldane, president of the British Chambers of Commerce, said the 15% tariff could apply from tomorrow unless the government provides clarification. The pound also drew support from a run of strong domestic data released last week. The latest S&P Global UK PMI showed private-sector activity expanding in February at its fastest pace since April 2024, while January retail sales exceeded expectations. Meanwhile, public sector net borrowing recorded a £30.4 billion surplus, the largest monthly surplus on record.
2026-02-23