Shabana Mahmood Set as UK Chancellor, Sterling Tests 1.3485
Shabana Mahmood, a fiscally disciplined centrist Labour MP, is set to become UK Chancellor. Sterling tested 1.3485 on the news, with traders seeing reduced risk of expansionary fiscal policy.
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Sterling pushed higher in London trade after the Financial Times reported Shabana Mahmood will be named Chancellor of the Exchequer in Andy Burnham's incoming Labour government. GBPUSD tested the 1.3485 resistance zone, with traders citing the appointment as a signal of fiscal restraint.
Mahmood, a Labour MP viewed as a centrist focused on responsible public finances, is expected to prioritize stable economic policy and maintain investor confidence. Investors have welcomed the pick, seeing it as reducing the risk of a sharp shift toward expansionary spending, traders said. That perception has supported UK government bonds and the pound.
Keir Starmer delivered his final Prime Minister's Questions on Wednesday and will step down next Monday. Burnham, the former Mayor of Greater Manchester, secured the Labour leadership unopposed, with overwhelming backing from Labour MPs. His first Cabinet appointments, including Mahmood at the Treasury, are part of a broader effort to project centrist, business-friendly governance, according to people familiar with the transition.
The Guardian reported that Burnham is playing down the prospect of a wealth tax for now, though he did not rule it out entirely.
GBPUSD was testing the 1.3485 level in afternoon trade. A break above that opens the swing high from May 25-26 at 1.3509.
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