British Pound rallies as Starmer exit is expected to end political uncertainty
- The Pound appreciates against its main peers following Prime Minister Keir Starmer's resignation.
- Markets welcome the decision as it puts an end to an increasingly isolated cabinet.
- Andrew Burnham, the best-positioned candidate to replace Starmer, calmed investors' fears about looser fiscal rules.
The British Pound (GBP) is. showing the strongest performance among the major currencies on Monday, rallying 0.3% against the Japanese Yen, 0.14% against the Euro, and ticking up 0.05% against the Dollar after reversing previous losses. The market has welcomed Sir Keir Starmer’s decision to step down as UK Prime Minister and Leader of the Labour Party.
In an emotional speech outside Downing Street, Starmer announced earlier on Monday that he would step down but would remain in office until a new leader is chosen. The Prime Minister also pledged support to whoever comes after him.
No fear of a void of power
Decisions of this sort tend to negatively impact the country’s currency, but this time the situation seems to be quite different. First of all, Starmer’s last few weeks have been the chronicle of a fall in slow motion, with various Labour leaders urging him to leave, and a constant trickle of cabinet resignations leaving Sir Keir Starmer completely isolated.
In this context, Andy Burnham, the Mayor of Manchester and the best-positioned candidate for the job, won a seat in parliament in a special election in Makerfield, dealing the last blow to Starmer.
Monday’s decision, thus, was hardly a surprise. Investors had been awaiting the resignation since the weekend, and, therefore, the market reaction has been more a relief that a dead cabinet is finally gone than angst over an uncertain political scenario.
And there is a reason for that. The replacement has been telegraphed during Starmer’s agony. And the market seems to like him. Although Andrew Burnham's background in Corbyn’s shadow cabinet does not make him the market’s darling, he has strived to show a moderate profile to ease market fears about fiscal recklessness, which would be the main threat to the Pound's stability.
Burnham has soothed investors, reiterating that he will adhere to fiscal rules. The Mayor of Manchester has been a strong defender of bringing services like water and transport under public control, but he has assured that he will play by the Chancellor of the Exchequer Rachel Reeves’ book, which so far seems to have convinced investors. The market has given him its approval, awaiting concretion about his policies. It is still to be seen whether the romance continues once he takes power.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.15% | -0.07% | 0.26% | 0.13% | 0.09% | 0.19% | 0.11% | |
| EUR | -0.15% | -0.22% | 0.11% | -0.03% | -0.02% | 0.06% | -0.03% | |
| GBP | 0.07% | 0.22% | 0.32% | 0.21% | 0.18% | 0.27% | 0.19% | |
| JPY | -0.26% | -0.11% | -0.32% | -0.12% | -0.16% | -0.07% | -0.12% | |
| CAD | -0.13% | 0.03% | -0.21% | 0.12% | -0.05% | 0.04% | 0.00% | |
| AUD | -0.09% | 0.02% | -0.18% | 0.16% | 0.05% | 0.11% | 0.04% | |
| NZD | -0.19% | -0.06% | -0.27% | 0.07% | -0.04% | -0.11% | -0.06% | |
| CHF | -0.11% | 0.03% | -0.19% | 0.12% | -0.01% | -0.04% | 0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
