Pound Dips Amid Political Uncertainty Ahead of Manchester Election

The British pound fell slightly ahead of a local election in Manchester, which could gauge Prime Minister Keir Starmer's political standing. Political uncertainties, economic forecasts, and potential rate changes by the Bank of England influenced the currency's performance.

The British pound edged lower on Thursday, reflecting market jitters ahead of a local election in Manchester that could provide an early assessment of Prime Minister Keir Starmer's political position.

The currency depreciated 0.13% against the dollar, trading at $1.3541, and 0.1% against the euro at 87.14 pence. Political uncertainty weighs heavily, as the upcoming vote in northwestern England's Gorton and Denton puts Starmer under scrutiny amidst skepticism over his policy decisions, including the controversial appointment of Peter Mandelson as ambassador to Washington, despite his denied links to Jeffrey Epstein.

Investors are closely evaluating the Bank of England's future rate decisions, amid recent mixed economic signals. The BoE Governor, Andrew Bailey, indicated a rate cut remains a possibility due to concerns over services inflation. Additionally, market watchers anticipate Finance Minister Rachel Reeves' forthcoming economic forecasts. The pound's trajectory reflects ongoing political and economic uncertainty.

(With inputs from agencies.)