2026.05.1406:34:24UTC+00Pound Nears Two-Week Low as UK Leadership Speculation Swirls

The British pound hovered just above $1.35 on Thursday, close to its weakest level since late April, as markets focused on the prospect of a leadership challenge to Prime Minister Keir Starmer. Health Secretary Wes Streeting, widely regarded as the most market-friendly potential successor, is expected to resign this week and could launch a leadership bid as early as today. At the same time, Angela Rayner, another likely contender, has been cleared by HMRC in a tax investigation, potentially removing a key obstacle to her entering the race. Rayner’s more left-leaning policy stance is generally viewed as negative for the gilt market.

On the economic front, UK GDP expanded by 0.6% in the first quarter of 2026, with annual growth of 1.1%, both beating expectations. The upside surprise was largely driven by March’s 0.3% increase in output, which defied forecasts for a 0.2% contraction.