Parliamentary markets slipped as traders reacted to the prospect of Andy Burnham challenging Keir Starmer for the Labour leadership. Sterling fell 0.4% while gilts slipped to 3.09% yield.

The mayor’s candidacy has raised concerns that a new government could relax the UK’s self‑imposed borrowing limits, a move that would unsettle fiscal markets. Investors fear a return to higher inflation and weaker fiscal discipline.

With the UK’s financial stability at stake, bond and currency traders are tightening risk buffers. The market’s swift retreat underscores how political uncertainty can translate into immediate liquidity pressure.