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- GBP/JPY jumps to session highs past 214.00 following news of UK PM Starmer’s resignation.
- The market has welcomed the news as they end a period of intense political uncertainty.
- The Yen is nearing 40-year lows against the US Dollar, which might trigger a Tokyo intervention.
The British Pound (GBP) accelerates its recovery against the Japanese Yen (JPY) on Monday to test levels above 214.00 at the time of writing. The Sterling is being boosted across the board, as investors welcome the decision of the United Kingdom Prime Minister, Keir Starmer, to step down.
Starmer appeared outside the 10th of Downing Street earlier this morning to announce that he is resigning as Prime Minister and as leader of the Labour Party. He also added that he will remain at the office until the party chooses a new leader.
A widely expected decision
The market reaction has been positive, as the resignation was widely expected since the weekend. Starmer’s position as prime minister was seriously questioned following a defeat in the local elections in England, Wales, and Scotland, which delivered a sound victory to Nigel Farage’s Reform UK populist party.
The Manchester Mayor, Andy Burnham, emerges as the best-positioned candidate for the job. Burnham secured a seat in parliament last week after winning a by-election in Makersfield, a condition for running for the country’s premiership, which dealt the final blow to Starmer.
The Japanese Yen, on the other hand, remains on its back foot, with the USD/JPY pair trading a few pips shy of the 40-year highs, at 161.95, which is considered the new line in the sand for Tokyo authorities. Japanese Finance Minister Satsuki Katayama reiterated that the authorities are ready to “respond to currency moves”, a warning that has been issued several times over the last few weeks.
