10.02.202609:04:15UTC+00Sterling Holds Below Four-Year High Amid UK Political Uncertainty

The British pound traded around $1.365, remaining below its late-January peak of $1.387 — the strongest level in more than four years — as investors reacted to fresh political developments in the UK. Sterling came under pressure after Prime Minister Keir Starmer’s chief of staff, Morgan McSweeney, resigned amid the Lord Peter Mandelson scandal, intensifying speculation over Starmer’s leadership. Tensions rose further when Scottish Labour leader Anas Sarwar publicly urged the prime minister to step down. Even so, backing from cabinet ministers and wider Labour Party figures helped stabilise market sentiment, indicating that Starmer has, at least for now, survived the immediate challenge. At the same time, growing expectations of further Bank of England interest rate cuts have also weighed on the currency. Although the central bank kept its benchmark rate on hold at 3.75% in a split decision, policymakers adopted a more dovish stance than anticipated, signalling that CPI inflation is likely to drift back toward the 2% target from April.