The pound sterling and British bonds are affected by investors' fears regarding a possible replacement of Prime Minister Keir Starmer with rival Labour member Andy Burnham.

The pound and British bonds were under pressure on Friday amid fears that a potential replacement of Prime Minister Keir Starmer with his Labour rival, Andy Burnham, could bring more left-wing economic policies. Burnham, the current mayor of Manchester, is likely to run for Parliament following the resignation of MP Josh Simons. Investors are concerned about the possible abandonment of the current fiscal discipline and the increase in borrowing and public spending under Burnham's leadership, especially following the poor results of the Labour Party in local elections.

Proposals from the left wing include an additional £40 billion in borrowing for housing and higher taxes on expensive properties. The pound hit a one-month low against the dollar, and the yield on 10-year bonds exceeded 5%. Analysts warn that political uncertainty will continue to affect British assets, and former diplomat Peter Ricketts highlights the risks to the UK's external influence.