Political upheaval in the UK has triggered a period of volatility for the pound.
2026-05-11 20:24:49
On Monday (May 11), during the Asian and European sessions, the euro opened sharply higher against the pound and then fell back to flat, currently trading around 0.8649.
The recent local elections in the UK have triggered dramatic changes in the political landscape, and the exchange rate of the pound sterling has also fluctuated significantly.
The right-wing Reform Party in the UK has experienced an explosive rise, which can be described as an "election earthquake" in British politics.
Before the local elections on May 7, 2026, the party had almost no local seats. After the elections, it won more than 1,350 local council seats and gained control of at least 13 local councils. In some areas, it even pushed the ruling Labour Party to third place.
The Reform Party accurately capitalized on the public's negative sentiment towards the Labour Party's poor governance, quickly rising from the political periphery to the core camp and significantly diverting voters from traditional parties.
The ruling Labour Party suffered a crushing defeat in this election, losing more than 1,400 local council seats in England. The majority of the votes were split between the Reform Party and the Green Party, and Prime Minister Starmer immediately faced a severe political survival crisis.
Pressure from all sectors of the government and opposition parties has been mounting, demanding that he specify a timeline for stepping down. This has severely shaken his foundation of governance and led to a continued loss of public trust.
The power struggle within the Labour Party is intensifying, with backbencher Catherine West spearheading a push for a leadership change and planning to finalize the election schedule for a new party leader in September. (This is the UK's mechanism for changing the prime minister, requiring the signatures of approximately 81 Labour MPs (20% of Labour MPs) and the nomination of a challenger.)
More than 30 Labour MPs have publicly called for Starmer to resign or set a timeline for his departure, and even his former political allies have turned against him, criticizing him for losing public trust.
External political parties also continued to launch attacks, with the Liberal Democratic Party accusing it of outdated governing philosophy and lack of livelihood policies;
Former Labour leader Jeremy Corbyn has harshly criticized the government's skewed military spending, inadequate welfare benefits, and controversial stance toward Israel.
Meanwhile, potential leaders emerged, including the Health Secretary, the former Deputy Prime Minister, and the Mayor of Greater Manchester. Only the Education Secretary and other core factions within the party publicly opposed the political infighting caused by the leadership contest, and the tug-of-war between various parties further exacerbated the political turmoil.
Faced with pressure from both inside and outside the country, Starmer has made a series of public statements.
He expressed his hope for significant progress in cooperation at the EU summit, did not believe that Britain was in an intractable predicament, stated that the Conservative Party's frequent changes of leadership had caused huge losses to Britain, and pledged that Britain would never be dragged into a war with Iran.
He admitted that he knew the public was disappointed in him, but made a clear refusal to step down, vowing to prove the doubters wrong with concrete actions. He emphasized that if the government mismanages the country, Britain will face a difficult situation, and he will take full responsibility for fulfilling his campaign promises of change.
In addition, he introduced measures such as nationalizing British Steel, providing a safety net for youth employment, and deepening international strategic cooperation, but his remedial statements were criticized by party members for being insufficient in scale and too late in timing.
Starmer faces multiple real obstacles to remaining in office: his approval ratings have been declining since he took office in 2024, coupled with controversial decisions to cut winter fuel allowances amid the cost of living crisis, scandals that have damaged his reputation, and rising support from the Reform Party and the Green Party, leading to growing calls for a change of leadership within the party. The risk of political turmoil in the UK is rising significantly.
From a financial market perspective, if the UK political scene falls into prolonged political turmoil, it will significantly exacerbate domestic policy uncertainty, weaken market confidence in pound assets, trigger risk aversion, and directly drag down the pound's exchange rate performance.
Political instability will hinder the effectiveness of the implementation of British economic policies, impact economic fundamentals, and consequently drive up the euro-pound exchange rate.
Conversely, if Starmer maintains his position in power and the political landscape stabilizes, market expectations will recover, and the euro will likely face downward pressure against the pound. In the short term, the direction of political maneuvering in the UK has become the core factor driving the euro-pound exchange rate fluctuations.
(Euro/Pound Sterling daily chart, source: EasyForex)
At 20:23 Beijing time, the euro is trading at 0.8647/48 against the pound.
The recent local elections in the UK have triggered dramatic changes in the political landscape, and the exchange rate of the pound sterling has also fluctuated significantly.
The right-wing Reform Party in the UK has experienced an explosive rise, which can be described as an "election earthquake" in British politics.
Before the local elections on May 7, 2026, the party had almost no local seats. After the elections, it won more than 1,350 local council seats and gained control of at least 13 local councils. In some areas, it even pushed the ruling Labour Party to third place.
The Reform Party accurately capitalized on the public's negative sentiment towards the Labour Party's poor governance, quickly rising from the political periphery to the core camp and significantly diverting voters from traditional parties.
Labour suffered a crushing defeat in the election, plunging Starmer into a governing crisis.
The ruling Labour Party suffered a crushing defeat in this election, losing more than 1,400 local council seats in England. The majority of the votes were split between the Reform Party and the Green Party, and Prime Minister Starmer immediately faced a severe political survival crisis.
Pressure from all sectors of the government and opposition parties has been mounting, demanding that he specify a timeline for stepping down. This has severely shaken his foundation of governance and led to a continued loss of public trust.
The power struggle within and outside the party intensifies, with multiple parties launching a wave of power grabs.
The power struggle within the Labour Party is intensifying, with backbencher Catherine West spearheading a push for a leadership change and planning to finalize the election schedule for a new party leader in September. (This is the UK's mechanism for changing the prime minister, requiring the signatures of approximately 81 Labour MPs (20% of Labour MPs) and the nomination of a challenger.)
More than 30 Labour MPs have publicly called for Starmer to resign or set a timeline for his departure, and even his former political allies have turned against him, criticizing him for losing public trust.
External political parties also continued to launch attacks, with the Liberal Democratic Party accusing it of outdated governing philosophy and lack of livelihood policies;
Former Labour leader Jeremy Corbyn has harshly criticized the government's skewed military spending, inadequate welfare benefits, and controversial stance toward Israel.
Meanwhile, potential leaders emerged, including the Health Secretary, the former Deputy Prime Minister, and the Mayor of Greater Manchester. Only the Education Secretary and other core factions within the party publicly opposed the political infighting caused by the leadership contest, and the tug-of-war between various parties further exacerbated the political turmoil.
Starmer speaks out strongly, striving to solidify his ruling position.
Faced with pressure from both inside and outside the country, Starmer has made a series of public statements.
He expressed his hope for significant progress in cooperation at the EU summit, did not believe that Britain was in an intractable predicament, stated that the Conservative Party's frequent changes of leadership had caused huge losses to Britain, and pledged that Britain would never be dragged into a war with Iran.
He admitted that he knew the public was disappointed in him, but made a clear refusal to step down, vowing to prove the doubters wrong with concrete actions. He emphasized that if the government mismanages the country, Britain will face a difficult situation, and he will take full responsibility for fulfilling his campaign promises of change.
In addition, he introduced measures such as nationalizing British Steel, providing a safety net for youth employment, and deepening international strategic cooperation, but his remedial statements were criticized by party members for being insufficient in scale and too late in timing.
Multiple obstacles combined make his future uncertain.
Starmer faces multiple real obstacles to remaining in office: his approval ratings have been declining since he took office in 2024, coupled with controversial decisions to cut winter fuel allowances amid the cost of living crisis, scandals that have damaged his reputation, and rising support from the Reform Party and the Green Party, leading to growing calls for a change of leadership within the party. The risk of political turmoil in the UK is rising significantly.
Political turmoil is impacting the foreign exchange market, with the euro experiencing a period of volatility against the pound.
From a financial market perspective, if the UK political scene falls into prolonged political turmoil, it will significantly exacerbate domestic policy uncertainty, weaken market confidence in pound assets, trigger risk aversion, and directly drag down the pound's exchange rate performance.
Political instability will hinder the effectiveness of the implementation of British economic policies, impact economic fundamentals, and consequently drive up the euro-pound exchange rate.
Conversely, if Starmer maintains his position in power and the political landscape stabilizes, market expectations will recover, and the euro will likely face downward pressure against the pound. In the short term, the direction of political maneuvering in the UK has become the core factor driving the euro-pound exchange rate fluctuations.
(Euro/Pound Sterling daily chart, source: EasyForex)
At 20:23 Beijing time, the euro is trading at 0.8647/48 against the pound.
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