Britain’s pound and government bond markets remained relatively stable on Monday following Prime Minister Keir Starmer’s resignation, a move that could pave the way for Greater Manchester Mayor Andy Burnham to become the country’s seventh prime minister in a decade.
Sterling fell 0.27% against the U.S. dollar to $1.3202 but showed little movement from levels seen earlier in the trading session. The pound was largely unchanged against the euro, with the single currency trading at 0.867 pounds.
Benchmark 10-year UK government bonds also remained steady, with yields rising by just one basis point to 4.85%, broadly unchanged from levels recorded before the political announcement.
UK equity markets showed limited reaction to the news, with the FTSE 100 edging slightly lower while the mid-cap FTSE 250 index declined by around 0.5%.
Pressure had been mounting on Starmer for several months as public dissatisfaction grew over the government’s handling of the economy and ongoing cost-of-living challenges.
Investor attention is now expected to focus on Burnham’s choice of finance minister should he succeed Starmer, particularly regarding who would replace Rachel Reeves.
Reeves has worked to maintain investor confidence in the government’s fiscal strategy and reassure bond markets about the sustainability of the UK’s public finances, making her potential successor a key consideration for financial markets.
