Pound heads for worst week in 18 months as Burnham lines up Labour bid

UK government borrowing costs jump amid political uncertainty and oil price rise that fuelled inflation worries The pound was heading for its worst week in 18 months on Friday as City traders anticipated that the UK prime minister, Keir Starmer, could face a challenge from the Manchester mayor, Andy Burnham, later this year. After days of uncertainty over Starmer’s future, sterling dropped by about three cents, or 2.2%, during the week to $1.332 on Friday, a five-week low. That would be the largest weekly drop against the US dollar since Donald Trump’s election win in early November 2024. The pound fell against the dollar every day this week as leadership tensions gripped Westminster, culminating in the prospect of Burnham challenging Starmer for the role of PM after the Greater Manchester mayor announced he would run for parliament in the north-west constituency of Makerfield. “The pound is weakening this morning after a sharp drop on Thursday, when Andy Burnham threw his hat into the ring,” said Kathleen Brooks, the research director at XTB. “This is a sign that Burnham is the least market-friendly of all the candidates, as Wes Streeting’s resignation did not have the same negati