Sterling and UK government bond markets are under pressure as investors weigh political uncertainty around Prime Minister Keir Starmer and the possibility of a leadership challenge later this year. The pound is set for its worst weekly performance against the US dollar in more than a year, after declining by nearly 3% over the week. One report says sterling falls to around $1.336 on Friday, a five-week low, following days of speculation about Starmer’s position.
Alongside the currency move, gilt yields rise, indicating higher borrowing-cost expectations. Bloomberg links the increases in yields to mounting market pressure connected to Starmer uncertainty. Separately, The Guardian reports that City traders anticipate Manchester mayor Andy Burnham could attempt to return to Westminster and potentially challenge Starmer for the party leadership.
Both outlets tie the market reaction to a combination of political risk and broader macroeconomic concerns. The Guardian also points to a rise in oil prices that could contribute to inflation worries, adding to investor caution.
