The Pound has fallen to $1.32, its lowest level against the US Dollar since November 2025, after Sir Keir Starmer resigned as Prime Minister today (Monday, June 22). The currency also dropped to €1.15 against the Euro, its lowest since February this year, as investors reacted to renewed political uncertainty.
Starmer's resignation announcement
Starmer announced his resignation this morning in a statement outside 10 Downing Street, saying every decision he has made in office has been about "putting the country I love first." He will remain in post until Labour chooses a new leader, which he has asked the party's governing body to ensure happens "before Parliament returns in September."
Andy Burnham is widely expected to replace Starmer as Labour's new leader after becoming the Member of Parliament for Makerfield last week.
Market reaction
The FTSE 100 has held flat near 10,357, while Government bond yields are stable for now, suggesting that markets do not anticipate an immediate fiscal collapse. However, currency experts warn of increased volatility ahead.
Speaking to Newspage, Prem Raja, Head of Trading Floor at Currencies 4 You, said investors are facing an uncertain month or two ahead. He added: "Following Prime Minister Keir Starmer's resignation, Sterling has fallen to its lowest level in around 12 months as investors react to a period of renewed political uncertainty. While the transition appears likely to be orderly, with Starmer remaining in office until Labour selects a new leader, markets generally dislike uncertainty and will be looking for clarity on the future direction of government policy."
"For the Pound, the key issue is not necessarily who becomes the next Prime Minister, but whether the change in leadership increases the likelihood of a General Election or significant policy shifts over the coming year. Until investors have greater certainty, Sterling could remain under pressure and experience increased volatility."
Impact on consumers and businesses
A weaker Pound can make imported goods, overseas travel and foreign currency purchases more expensive, while businesses with international suppliers may face higher costs, experts say. Tony Redondo, Founder at Newquay-based Cosmos Currency Exchange, added: "Like all before him, Starmer's resignation has brought immediate volatility to the UK financial markets, injecting a fresh 'political risk premium' into the Pound Sterling. The Pound bore the brunt of the shock, dropping to lows against the Euro and the US Dollar."
"Conversely, the FTSE 100 has held flat near 10,357 – its heavy concentration of multinationals with foreign revenues often acts as a natural buffer when the Pound weakens. Government bond yields remain stable for now, signalling that markets don't anticipate an immediate fiscal collapse."
"A weaker Pound will push up import costs, keeping pressure on the cost of living. Furthermore, Starmer’s summer caretaker status triggers policy paralysis ahead of the UK-EU Summit on 22 July."
