FX.co ★ Sterling Drops After Burnham Win

The British pound fell below $1.32, its weakest level since late March, after Greater Manchester Mayor Andy Burnham won the Makerfield by-election with 54.8% of the vote, bolstering his standing as a potential rival to Prime Minister Keir Starmer. At the same time, investors assessed the latest policy decisions from the Bank of England and the US Federal Reserve. As widely anticipated, the BoE voted 7–2 to leave interest rates on hold at 3.75%, while maintaining a cautious stance amid uncertainty over the economic fallout from Middle East-related energy shocks. The bank reiterated that it stands ready to respond to inflationary pressures, though it trimmed its forecast for peak inflation in Q4 2026 to 3.25% from 3.6%. This decision came after the Fed also kept rates unchanged, even as an increasing number of its policymakers flagged the potential for further tightening later this year.