Sterling Rebounds After Starmer's Resignation

2026-06-22 12:35 By Joana Taborda 1 min. read

The British pound rebounded toward $1.33 after falling to its lowest level since March earlier in the session, as markets reacted to Prime Minister Keir Starmer's resignation, paving the way for a change in the UK's leadership.

The resignation follows Greater Manchester Mayor Andy Burnham's by-election victory last week, which enabled his return to Parliament.

Burnham subsequently announced his intention to seek the premiership.

Prospects for a smooth leadership transition improved after Wes Streeting, previously viewed as a potential challenger, declared his support for Burnham's candidacy.

Investors are now focused on the implications for the UK's fiscal outlook, seeking greater clarity on Burnham's fiscal policy agenda, with few concrete details available so far.

A key concern remains the possibility of increased gilt issuance to finance higher public spending, which could further strain the UK's already fragile public finances and elevated debt burden.



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Sterling Rebounds After Starmer's Resignation
The British pound rebounded toward $1.33 after falling to its lowest level since March earlier in the session, as markets reacted to Prime Minister Keir Starmer's resignation, paving the way for a change in the UK's leadership. The resignation follows Greater Manchester Mayor Andy Burnham's by-election victory last week, which enabled his return to Parliament. Burnham subsequently announced his intention to seek the premiership. Prospects for a smooth leadership transition improved after Wes Streeting, previously viewed as a potential challenger, declared his support for Burnham's candidacy. Investors are now focused on the implications for the UK's fiscal outlook, seeking greater clarity on Burnham's fiscal policy agenda, with few concrete details available so far. A key concern remains the possibility of increased gilt issuance to finance higher public spending, which could further strain the UK's already fragile public finances and elevated debt burden.
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Pound Nears YTD Low as PM Starmer Resigns
The British pound weakened to $1.32 on Monday, approaching its lowest level this year after Prime Minister Keir Starmer resigned. Starmer's departure preludes a Labour Party successor by the start of September, with long-time Manchester mayor Andy Burnham seen as favorite to take the leadership role after winning the by-election last week. Burnham is seen as a fiscal dove and called for higher government expenditure, thus pressuring the sterling and lifting gilts across the curve, driving foreign investors to pivot out of pound-denominated assets as yields were already at their highest among G7 members. On the monetary policy front, the Bank of England left interest rates unchanged at 3.75% this month and maintained a cautious stance. The central bank also revised down its forecast for peak inflation in the fourth quarter of 2026 to 3.25%, from a previous estimate of 3.6%.
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2026-06-22