Sterling Steadies After Starmer Exit, But Burnham Test Awaits

Sterling barely moved after Keir Starmer resigned as UK Prime Minister. That calm is not a vote of confidence for expected successor Andy Burnham, said Nigel Green, CEO of deVere Group. It's relief that a period of drift ended.

Markets dislike uncertainty. Starmer's departure removed one source of it. Labour appears to have avoided a prolonged leadership fight. The pound's steady response reflects that relief, not an endorsement of Burnham.

The Relief Trade

“Part of the market response reflects relief. Relief that Starmer has gone,” Green said. “The market has not yet delivered its verdict on Burnham.”

Investors are still assessing what a Burnham government would mean for taxes, spending, and wealth. Green noted that Burnham has long argued Britain taxes work too heavily and wealth too lightly. That position will get intense scrutiny in the coming weeks.

Another open question: the future of Chancellor Rachel Reeves. She was central to Labour’s effort to rebuild credibility with financial markets. Investors want clarity on whether her framework survives under new leadership.

The Burnham Test

“Today's relative stability should not be confused with certainty about Britain's future economic direction,” Green said. “The pound has given Burnham the benefit of the doubt. That's very different from giving him a vote of confidence.”

The next phase centres on Burnham's actual policy signals. Markets will watch signals on taxation, investment, and public spending. Sterling's resilience depends on whether investors see Britain as an attractive place to allocate capital.

If they see higher risks to growth and capital formation, the pound will come under pressure. If the policy agenda supports investment, the calm could hold. For now, the market is waiting–not buying.