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

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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 almost three cents, or 2%, during the week to $1.336 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.