Pound Sterling Weakens After Andy Burnham's Victory
The British pound weakened to below US$1.32 in the latest trading on Friday (June 19th). This was its lowest level since late March. Pressure on sterling arose after the Mayor of Greater Manchester, Andy Burnham, won the Makerfield by-election with 54.8% of the vote, strengthening his position as a potential challenger to Prime Minister Keir Starmer.
Burnham's victory added to political uncertainty in the UK. Investors believe the result could increase pressure on Starmer's leadership, especially if political support for Burnham continues to grow. Under these conditions, the market tends to be cautious because changing political dynamics could affect the direction of economic policy and sentiment towards UK assets.
In addition to political factors, the market is also digesting the latest decision by the Bank of England. As expected, the BoE maintained interest rates at 3.75% by a 7-2 vote. The central bank remains cautious due to lingering uncertainty regarding the economic impact of the surge in energy prices related to the conflict in the Middle East.
The BoE emphasized its readiness to respond if inflationary pressures rise again. However, the central bank also lowered its projection for peak inflation in the fourth quarter of 2026 to 3.25% from the previous 3.6%. Meanwhile, pressure on the pound intensified after the Federal Reserve maintained interest rates, but several officials signaled the possibility of further tightening this year. The combination of UK political uncertainty, the Bank of England's cautious stance, and the Fed's hawkish signals mean that sterling's recovery remains limited. (asd)
Source: Newsmaker.id
