Pound gains as cabinet members back Starmer

Market jitters over the future of Prime Minister Keir Starmer have eased in the past couple of trading session after a raft of cabinet ministers issued coordinated statements publicly backing the under fire Labour leader.

The pound has found a bit of support off the back of the news, as market participants take the stance that it is better the devil you know than the devil you don’t. This is far from the end of the story, however, and we still think that it is a matter of when, rather than if, the PM will either stand down or be forced out of office.

Betting market Polymarket still has around a 70% chance he’ll be gone by year-end, with a 50/50 shot that he’ll be out in by the end of June. For now, at least, the staving off an immediate challenge to Starmer’s authority, and the threat of a possible move to the political left under a Rayner led government, could provide a modest boost to Sterling.

Fourth quarter GDP figures will be released on Thursday morning, with economists bracing for modest, but positive, growth of 0.2%.