Sterling gains 1.6% against the euro year-to-date despite new UK government

The British pound gained approximately 1.6 percent against the euro over the past twelve months, outpacing many of its peer currencies. Sterling also rose 2.8 percent versus the Swiss franc, 4.9 percent versus the Swedish krona, and 1 percent against the Canadian dollar. Performance against the U.S. dollar remained near flat, while gains against the Japanese yen were negative at 1.3 percent. These figures reflect a period where British reserves held firm despite significant internal shocks. On July 20, Prime Minister Keir Starmer resigned, marking the seventh leader in Britain's history within a single decade. Markets are currently evaluating whether incoming officials will adhere to fiscal constraints championed by former Finance Minister Rachel Reeves. While borrowing costs increased under successor Andy Burnham, this movement aligned with a broader global decline in government bond values. Matthew Ryan of Ebury noted that the initial change in leadership eliminated certain political risks, resulting in sterling's unexpected success over the last quarter. The economy showed growth of 0.4 percent in the second quarter following 0.6 percent expansion in the prior quarter.