Details
- Sterling eased after Starmer’s resignation speech, extending recent pressure on the pound.
- The pound has fallen around 3% since February as speculation over Starmer’s leadership intensified.
- The benchmark 10-year UK gilt yield stood around 4.85%, with borrowing costs still elevated by international standards.
- Analysts said the muted reaction suggested markets had largely priced in Starmer’s exit, but remained cautious about what comes next.
- Investors are focused on whether the next Labour leader and chancellor will maintain fiscal rules or shift toward higher spending and borrowing.
- Andy Burnham is widely viewed as the frontrunner to succeed Starmer, but markets are watching policy signals more closely than the leadership contest itself.
- The FTSE 250, which is more exposed to the domestic economy, fell to a one-week low, while the FTSE 100 was broadly stable.
- Rate-sensitive sectors, including homebuilders and household goods companies, came under pressure as traders weighed the impact on interest rates and mortgage costs.
- Mortgage brokers are watching gilt and swap markets because fixed-rate mortgage pricing is closely tied to swap rates.
- Global traders were also focused on talks to end the US-Iran conflict and signs that shipping was resuming through the Strait of Hormuz.
What Else
Markets will watch the Labour leadership contest, expected to conclude before Parliament returns in September. The next chancellor and early signals on tax, spending and borrowing are likely to matter more for investors than the resignation itself.
