Pound heads for worst monthly performance since July

By Amanda Cooper

LONDON, June 25 (Reuters) - The pound was set for its worst monthly performance against the dollar since last July on Thursday, in a week that marked the tenth anniversary of the Brexit vote and brought the resignation of Labour Prime Minister Keir Starmer.

Sterling has lost 2.2% in June, the most in a month since July 2025, when it fell 3.8%. It was trading at $1.3161 on Thursday, down 0.1% on the day and not far off its lowest since November. 

The suspension of hostilities between the United States and Iran has allowed energy products to flow once again through the Strait of Hormuz, which has knocked 20% off the crude oil price in the space of two weeks. This has taken some pressure off the Bank of England to hike rates to ward off a damaging spike in inflation and with it, removed a potential tailwind for the currency.

Markets show traders think there will be one rate rise this year, down from two just a couple of weeks ago.

Meanwhile, Starmer's plummeting popularity prompted him to resign on Monday, meaning the country will get its seventh prime minister in the 10 years since Britain voted to leave the European Union, the anniversary of which fell on June 23.

Former Greater Manchester mayor Andy Burnham, who took up a seat in parliament this week after winning a local election, is the frontrunner to take over from Starmer. The assumption is he will not retain current finance minister Rachel Reeves.

Investors are keen to see who he names as her replacement and how well they can retain the confidence of bondholders.

“Prime ministers and chancellors are a pivotal double-act of the UK government. So with Andy Burnham now widely expected to become prime minister in the coming months, attention turns to who will be running the Treasury," Sarah Coles, head of personal finance at AJ Bell, said.

“There are several names in the frame, all bringing something different to the table. The question is whether the next dynamic duo will adopt a similar approach to Starmer and Reeves, or head down another route entirely."

(Reporting by Amanda Cooper; Editing by Andrew Heavens)