British Pound falls as Starmer's resignation weighs on Sterling
- GBP/JPY comes under pressure as the Sterling weakened following UK Prime Minister Keir Starmer's resignation.
- UK political uncertainty weighs on the Pound with markets watching the upcoming Labor leadership nominations starting July 9.
- Weak UK PMI data added downside pressure with the Composite PMI remaining in contraction at 49.4 and the Services PMI falling to 48.7.
The GBP/JPY cross came under pressure near the 213.00 level on Wednesday as the British Pound weakened after United Kingdom (UK) Prime Minister Keir Starmer announced he would stand down as Labour Party leader and Prime Minister. The political shock added uncertainty to the UK outlook, with nominations for Labour’s leadership expected to begin on July 9.
Sterling lost ground as investors assessed the risk of a leadership transition at a time when the UK economy is already showing signs of weakness. Markets are likely to watch whether the next Labour leader signals any major shift in fiscal policy, borrowing plans, or economic priorities as political uncertainty could keep the Pound vulnerable in the near term.
The S&P Global UK Composite Purchasing Managers Index (PMI) slipped to 49.4 in June from 49.7 in May, remaining below the 50.0 threshold for a second straight month. The Services PMI fell to 48.7 from 49.3, marking the weakest reading in 41 months, while the Flash UK Manufacturing Output Index improved to 53.6 from 52.2.
Short-term technical analysis:
On the 4-hour chart, GBP/JPY trades at 213.02, maintaining a bearish near-term tone as price holds beneath both the 20-period Simple Moving Average (SMA) at 213.45 and the 100-period SMA at 214.31. This configuration suggests rallies are likely to be capped while below these averages, with the Relative Strength Index (RSI) lingering around 41, hinting at subdued bullish momentum rather than outright oversold conditions.
On the topside, immediate resistance appears at 213.25, followed by a confluence zone around 213.45 where a horizontal barrier aligns with the 20-period SMA, while the 100-period SMA at 214.31 marks a stronger hurdle if recovery attempts extend higher. On the downside, initial support is seen at 212.77, ahead of the lower horizontal floor at 212.54, where a break would reinforce the broader bearish bias and expose deeper declines.
(The technical analysis of this story was written with the help of an AI tool.)
Author
Agustin Wazne
FXStreet
Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.
