Pound tumbles as Keir Starmer preps for Wes Streeting leadership challenge amid Labour chaos

The pound's value has plummeted against the US dollar as Prime Minister Keir Starmer prepares for a rumoured challenge to the Labour Party challenge from Health Secretary Wes Streeting.

This afternoon, sterling slipped 0.3 per cent against the reserve currency to $1.35 and lost earlier gains against the euro as political chaos threatens to bring down the premiership.

Since its peak last week, the British pound has fallen one per cent following the Labour Party's poor performance in last week's council, Scottish and Welsh elections.

Government borrowing continues to add pressure to Sir Keir's woes as long-term costs continue to flirt with 28-year highs, with 10-year gilts sitting at around 5.08 per cent around 3 pm today.

However, 30-year gilt yields have slipped to around 5.77 per cent after reaching new heights earlier this month.

This morning, Mr Streeting had a 16-minute meeting with the Prime Minister to discuss his options as Labour continues to fall behind Reform and the Green Party in the polls.

This has resurrected rumours that the Health Minister is plotting to launch a leadership challenge against his boss as soon as tomorrow to resurrect the party's chances in future elections.

Despite this, Sir Keir's official spokesman claimed the PM has "full confidence" in Mr Streeting as the country's Health Secretary.

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The Ftse 100 returned to the green today, crossing the 10,300 mark once again, despite the ongoing political turmoil in Wesrminster.

Financial analysts have sounded the alarm that investors may end up spooked by the prospect of a change of leadership, as well as the US-Iran conflict continuing for the foreseeable future.

Susannah Streeter, chief investment strategist, Wealth Club, said: "Stagflation fears are stalking financial markets as the war with Iran looks increasingly intractable and high energy prices look set to be the burden to bear for the global economy.

"Higher inflation and a stagnating economy are increasing the risk of loan defaults and weaker borrowing demand, which look set to eat into profitability.

"A glass-half-empty attitude is swirling this morning for the Ftse 100, as concerns about the tense situation in Iran collide with worries about political upheaval in the UK.

"Far from managing to shore up support, Prime Minister Keir Starmer’s position looks increasingly shaky, and this is feeding through into fresh bond market jitters.

"With cabinet ministers now joining the throngs of MPs calling for him to step down, instability is back at the heart of British politics."