Mitsubishi UFJ: UK Leadership Challenge Still Poses Risk to Pound

Lee Hardman of Mitsubishi UFJ Bank stated in a report that the prospect of a leadership challenge against Prime Minister Keir Starmer still poses a risk to the pound. Andy Burnham was prevented from participating in a local election that could have paved the way for him to challenge Starmer. However, Hardman said that if the Labour Party loses to the UK Reform Party in local elections and performs poorly in the broader local elections in May, then this decision may backfire. He said that this could increase the risk of leadership challenges from other potential candidates. He also said that local elections pose a threat to the pound, and if inflation slows and gets closer to the target level, strong growth is also unlikely to prevent the Bank of England from further cutting interest rates this year.