STORY
Sterling dipped as speculation mounted that Keir Starmer could announce a timetable for leaving office. Reuters reported that the pound fell by around 0.2% against the dollar on Monday as investors monitored the political uncertainty surrounding the Prime Minister’s future.
The market reaction came after several days of pressure on Starmer following Andy Burnham’s Makerfield by-election victory. Analysts said Britain’s fiscal position, high debt interest costs and weak growth meant that any new Labour leader would have limited room for large spending commitments, even if they promised a change of political direction.
Burnham has said he would respect the Government’s fiscal rules, but investors are expected to scrutinise any leadership campaign for signs of tax, borrowing or spending changes. The political uncertainty comes as the UK continues to face high borrowing costs compared with other major economies.