UK Labour's Andy Burnham wins Makerfield by-election, paving way to challenge PM Starmer

Lallalit Srijandorn FXStreet

Greater Manchester Mayor Andy Burnham could now challenge UK Prime Minister Keir Starmer for the leadership of the governing Labour Party and the country after winning a parliamentary seat in northern England on Friday, CNN reported on Friday.

Burnham won the contest in Makerfield in northwest England with 24,927 of the votes, while Nigel Farage's anti-immigration Reform UK party came second with 15,696 votes.

Market reaction

At the time of writing, the GBP/USD pair is down 0.01% on the day to trade at 1.3205.

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

USD/JPY holds pullback from 161.80 on hawkish BoJ-speak

USD/JPY is holding above 161.00 in the Asian session on Friday, on a retreat from its highest level since July 2024 set the previous day. Hawkish BoJ commentary and April Minutes affirm further rate hike expectations, offsetting the softer Japanese National CPI print and support the Japanese Yen as intervention fears loom.

AUD/USD attacks 0.7000 amid stronger US Dollar

AUD/USD attacks 0.7000 in the Asian session on Friday, remaining close to the weekly low, and seems poised to register modest weekly losses. The US Dollar sits near its highest level since May 2025 as the Fed's hawkish tilt overshadows optimism over the US-Iran peace deal, weighing on the pair.

Gold remains a lose-lose trade despite the US-Iran peace deal

Gold extends three-day losing streak below $4,200, eyes third straight weekly loss. The US Dollar sits at yearly highs amid hawkish Fed outlook, renewed Iran tensions. Technically, Gold remains vulnerable, with a retest of $4,000 likely on the cards.

Economics week ahead

Consumer resilience is holding for now, but underlying fundamentals continue to erode. Incoming data—like control group retail sales and higher-frequency card data—point to a solid nominal consumption backdrop in May.

Back above 100: Kevin Warsh’s first Fed meeting sparks US Dollar rally

The US Dollar Index did a phoenix comeback, rising from its ashes and reconquering 100. The reasons behind the US Dollar rally are pretty clear: the Memorandum of Understanding between the United States and Iran, and a hawkish Federal Reserve. Both events were long-awaited and much expected. However, the market reacted with surprise when there were no surprises at all.

The next big AI trade may not be about chips or software

Artificial intelligence has already created some of the biggest winners in modern market history. Chipmakers have surged, data centre construction is booming, and electricity demand forecasts are changing globally.