Pound heads for worst week in 18 months as Burnham lines up Labour bid
Summary
The British pound dropped to its lowest level in five weeks, heading for its worst week in a year and a half, due to concerns about possible UK leadership changes. Manchester mayor Andy Burnham is planning to challenge Prime Minister Keir Starmer, which worried investors about potential increases in government borrowing and spending.Key Facts
- The pound fell by about 2% to $1.336, its weakest point in five weeks.
- This is the largest weekly drop against the US dollar since President Trump’s 2024 election win.
- Andy Burnham intends to run for parliament and may challenge Keir Starmer for prime minister.
- UK government bond yields rose sharply, signaling higher borrowing costs.
- Yields on 10-year UK bonds hit nearly 5.17%, the highest since 2008.
- Investors fear Burnham could loosen fiscal rules and increase government debt.
- Burnham said earlier that the UK is trapped in low economic growth and debt problems but has softened his stance recently.
- The political uncertainty is causing instability in financial markets and could last for some time.
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