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GBP/USD slips after UK PM transition and oil lifts inflation risks

The pair dropped to 1.3437 as investors weighed Andy Burnham’s signals on fiscal rules and potential tax relief, alongside higher oil prices that are seen as keeping the Bank of England on a higher-for-longer path.

Reported · Written up by our desk · Major Pairs

GBP/USD fell to 1.3437 on Tuesday as investors assessed the appointment of Andy Burnham as the new UK prime minister and the implications for monetary policy. Burnham succeeded Keir Starmer without a contest, becoming the country’s seventh prime minister in the past decade and the second since Labour returned to power in 2024, according to Action Forex.

Burnham reaffirmed commitment to existing fiscal rules but signaled he would consider increasing the tax-free personal allowance, which has been frozen in recent years. Action Forex said attention is now turning to the appointment of the Chancellor of the Exchequer, with Shabana Mahmood considered the leading candidate in media reports.

Elevated oil prices also weighed on sterling, Action Forex noted, raising inflation risks and reinforcing expectations that the Bank of England will keep interest rates higher for longer. On the H4 chart, the market is moving lower toward 1.3380, with a consolidation range centered around 1.3468, and technical indicators pointing to continued bearish momentum.

Latest closeGBP/USD 1.348 ▼0.5%

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