The British pound has fallen against the euro amid ongoing political turmoil in the UK, with Prime Minister Keir Starmer's future in Number 10 Downing Street hanging in the balance.
Borrowing costs also spiked this afternoon, with both the 10-year and 30-year gilts jumping in response to Anas Sarwar calling on the Prime Minister to resign.
The Scottish Labour Leader became the first prominent figure in the party urging Mr Starmer to resign over his handling of Peter Madelson scandal.
Mr Sarwar said: "This isn’t easy and it’s not without pain, as I have a genuine friendship with Keir Starmer. But my first priority and my first loyalty is to my country, Scotland.
Pound plummets and borrowing costs spike as Keir Starmer's political future hangs in the balance
|GETTY / GOOGLE /CNBC
"That’s why the distraction needs to end and the leadership in Downing Street has to change. We cannot allow the failures at the heart of Downing Street to mean the failures continue here in Scotland."
Following his announcement, sterling slipped to around 0.8725 per euro this afternoon, which is its lowest since January 22.
The Government's 10-year jumped to 4.567 per cent after Mr Sarwar's speech, with 30-year borrowing costs remaining elevated at 4.389 per cent.
This slight move in the bond markets come after a muted response to the resignation of Morgan McSweeney, who served as Number 10's chief of staff under Mr Starmer.
Anas Sarwar | PALATEST DEVELOPMENTS
Russ Mould, investment director at AJ Bell, said: "Politics were front of mind for investors in the UK after the resignation of chief of staff, Morgan McSweeney.
"Gilt yields and the pound nudged slightly higher as markets digested ongoing speculation about the future of Keir Starmer as Prime Minister. Movement among government bonds and the currency suggests there is no panic on financial markets about the stability of the UK Government."
The Labour Government has came under over its handling of the economy since returning to power in July 2024, with gross domestic product (GDP) coming in lackluster despite Chancellor Rachel Reeves's attempts to course correct..
Tomorrow, the Office for National Statistics (ONS) is set to publish the first GDP quarterly estimate for October to December 2024.
Chancellor Rachel Reeves has defended the Prime Minister
| GB NEWSThe Chancellor took to X to defend the Prime Minister after Mr Sarwar's resignation call.
Ms Reeves said: "Rebuilding Britain takes time. But thanks to the decisions we've made NHS waiting lists are falling. Inflation is falling.
"Interest rates are falling. The conditions for the economy to grow are there. With Keir as our Prime Minister we are turning the country around."
More From GB News