Reactions to Starmer's resignation

Starmer's resignation calms markets

The British pound fell to a year's low ahead of Prime Minister Keir Starmer's expected resignation before the currency recovered, Bloomberg reports.

After Labour politician Andy Burnham opened to take over, government bond yields fell while the London Stock Exchange traded up to plus. The trend was strengthened after former health minister Wes Streeting, who had also been a strong challenger to Starmer, openly gave Burnham his support.

The development is a sign that the most important thing for investors is to "avoid more uncertainty," writes Bloomberg's markets editor Sam Unsted.

The small reactions before Starmer's expected resignation were interpreted by Bloomberg economists as investors seeing a change of party leader "as political noise rather than a genuine threat to Britain's fiscal credibility." 

Market: Streeting favourite for chancellor

Speculation about who could become the next British chancellor is already rife among fixed income traders after Keir Starmer announced his resignation, Bloomberg reports.

Former health minister Wes Streeting is considered the most market-friendly option, analysts say. Energy minister Ed Miliband, foreign minister Yvette Cooper and former defence minister John Healey are also mentioned.

Although British government bonds and the pound barely reacted to Starmer's resignation, both strengthened slightly after Streeting endorsed Andy Burnham's candidacy for party leadership.

- I'm more worried about the choice of chancellor than Burnham, says Mizuho strategist Jordan Rochester, adding:

- I highly doubt Reeves will stay.