The British pound eased to around $1.346 after reaching a two-month high of $1.354 earlier in the week, but remained on track for a weekly gain against the US dollar.

Markets have largely priced in Andy Burnham’s expected confirmation as Labour leader today, with attention now turning to his choice of Chancellor.

Reports that Mahmood is the leading candidate have reassured investors and eased concerns over a more expansionary fiscal approach under Ed Miliband.

Meanwhile, rising tensions in the Middle East have pushed oil prices to one-month highs, reinforcing expectations that the Bank of England will continue tightening monetary policy.

Markets now fully price in a rate hike in November, with another increase expected by March 2027.

UK GDP rose 0.1% in May after a 0.1% contraction in April, while growth over the three months to May reached 0.7%, beating forecasts of 0.5%.