In a day marked by rising stock prices in London, calls for Prime Minister Sir Keir Starmer’s resignation intensified following remarks from Anas Sarwar, leader of Scottish Labour. While the FTSE indices moved upwards, political uncertainty loomed large over the UK’s economic landscape, with investors keenly observing how the domestic political situation unfolds.
Market Highlights
The London stock market closed on a positive note on Monday, with the FTSE 100 gaining 16.48 points, or 0.2%, to finish at 10,386.23. Meanwhile, the mid-cap FTSE 250 rose by 132.14 points, or 0.6%, ending at 23,340.03. The AIM All-Share index also experienced a boost, closing up 10.24 points, or 1.3%, at 817.04. Miners were the standout performers, largely driven by a surge in gold prices, with Antofagasta leading the charge, up 6.6%.
Gold prices reached $5,068.99 per ounce, a notable increase from the previous close of $4,946.87.
Political Pressures Intensify
Anas Sarwar’s public call for Sir Keir Starmer to step down has escalated concerns regarding the Prime Minister’s stability, particularly in light of the ongoing controversy surrounding Lord Peter Mandelson’s appointment as British ambassador to Washington. Sarwar’s remarks come as Scottish Labour prepares for the critical Holyrood elections, where polling suggests they may finish behind both the SNP and Reform.
In response to the mounting pressure, Downing Street affirmed Starmer’s commitment to his role. A spokesperson stated, “Keir Starmer is one of only four Labour leaders ever to have won a general election. He has a clear five-year mandate from the British people to deliver change, and that is what he will do.”
Deputy Prime Minister David Lammy echoed this sentiment, asserting on social media that Starmer’s mandate remains strong and that the party must remain focused on its mission.
Currency Movements and Economic Outlook
While UK assets are under scrutiny due to the political turbulence, the pound managed to strengthen against the dollar, trading at 1.3668, up from 1.3612 on Friday. The euro also gained ground, finishing at 1.1897 against the dollar. Analysts from StoneX noted that despite the current political climate, the FTSE 100 remains resilient, buoyed by a global risk rally.
However, market experts caution that the political instability could weigh heavily on the pound’s future performance. Fawad Razaqzada from StoneX remarked, “Political uncertainty hanging over the UK markets makes us bearish on the pound forecast in the near term.”
Corporate Developments
In corporate news, NatWest shares fell by 6.0% despite the bank announcing a £750 million share buyback, alongside a £2.7 billion acquisition of wealth manager Evelyn Partners. Shore Capital analyst Gary Greenwood expressed caution regarding the deal, emphasising the need for synergy delivery to validate the price.
On a positive note, Plus500, the contracts-for-difference trading platform, reported a robust start to 2026, with shares soaring by 9.3% after announcing significant returns to shareholders.
Among smaller firms, Chill Brands experienced a surge of 22%, attributing its success to increasing demand for its products, with revenues showing impressive month-on-month growth.
Why it Matters
The current political turbulence surrounding Prime Minister Starmer and the potential ramifications for his leadership could significantly impact the UK’s economic environment. As investors navigate through this uncertainty, the resilience of the stock market, coupled with the pound’s recent performance, indicates a complex interplay between political stability and market confidence. The outcomes of the approaching Holyrood elections and how Labour navigates these challenges will be critical in shaping the future economic landscape of the UK.
