The Burnham Gambit
Many would have thought, ‘who’s Shabana Mahmood’ when we wrote of the headlines that had driven GBP higher last week. If you were amongst that group, you may find little reassurance this morning when I tell you that those headlines that had favoured GBP have transpired to be wrong. Incoming Prime Minister Andy Burnham has instead announced former defence secretary John Healey as the chancellor.
Despite being a relative unknown, rumours of Mahmood’s likely appointment had driven Sterling higher as she represented the more fiscally conservative arm of the Labour Party. The same is true for Healey, the Minister likely represents a cut from the same fiscal faction as Mahmood would have done but his fiscal ambitions remain a complete mystery. Sterling spot and forward prices are reflecting this growing uncertainty with cable falling back towards 1.34. The options space is showing less reaction despite an uptick in realised volatility due to the summer recess limiting the opportunity for this political upheaval to take effect.
Burnham hasn’t made his first 24 hours in office easy for markets or investors. Despite positioning himself to be more market-friendly during the run-up to his leadership contest and beyond, some of the headlines coming from number 10 are worrisome. In particular, the Prime Minister in his lectern-less speech before entering number 10 seemed to be looking to ramp up spending. Shortly after entering number 10, Burnham said he will seek to use ‘any flexibility’ within fiscal rules causing shock waves that pushed through markets.
Discussion and Analysis by Charles Porter
Related Insights
Daily Brief – Defiance
Charles Porter
Tue 12 May 2026
Defiance Yesterday’s market was defying one of two things: logic or gravity. Come to think of it, perhaps both. Take cable, GBPUSD, yesterday. The key events beyond minor data releases centred around any chatter from either side of the Iranian conflict and Starmer singing for his supper. Sing he did and tweet the President did, […]
Daily Brief – A technicality
Charles Porter
Thu 25 Jun 2026
A technicality Markets appeared to be fatigued by Trump’s Iran war before a ceasefire had even been agreed. This was evident from pricing that would have been considered complacent should the conflict have dragged on longer than it ultimately did. Now, that saga is far from over – it’s inevitable, for example, that as the […]
Daily Brief – Short-lived relief rally
Charles Porter
Tue 19 May 2026
Short-lived relief rally A tantrum in the bond market has continued to erode away at risk conditions in recent sessions. In the UK, the sell-off in gilts and corporate bonds has been particularly acute thanks to heightened political instability, the origins of which we have covered thoroughly in recent briefings. Yesterday, headlines delivered enough optimism […]
