London pre-open: Stocks to drop, pound hit as Burnham confirms plans to return to Wesminter

(Sharecast News) - London stocks were set to slide at the open on Friday, with sterling under pressure amid the prospect of Andy Burnham's return to Westminster.

The FTSE 100 was called to open around 92 points lower. At 0720 BST, sterling was down 0.5% against the dollar at 1.3342 after the Mayor of Greater Manchester announced plans to stand as the Labour party's candidate in a by-election in Makerfield.

The news came after ex-minister Josh Simons said he would step down to allow Burnham a way back into Westminter.

Nigel Green, chief executive of deVere Group, said the move has been widely interpreted in Westminster and financial markets "as the clearest sign yet that he is positioning himself for a future Labour leadership bid as pressure intensifies on Sir Keir Starmer".

"Andy Burnham represents the biggest threat to the gilt market among the serious Labour contenders because investors will immediately associate his leadership ambitions with heavier state spending, looser fiscal discipline and a greater willingness to test market tolerance on borrowing," Green said. "The bond market remains traumatised by the Liz Truss mini-budget crisis.

"Everyone still remembers how quickly Britain lost credibility once investors believed fiscal discipline had broken down."

In corporate news, construction products distributor Grafton Group said it delivered a "resilient" start to 2026, but warned that rising cost pressures due to the Iran war could dent market demand and volumes.

Reported revenues were up 3.2% year-on-year at £830.1m over the first four months of the year, though average daily like-for-like sales were unchanged as declines across the UK offset growth elsewhere.

The company said it is actively managing supply chain risks arising from the conflict in the Middle East, with high levels of stock available for customers, though some inflationary pressures are starting to creep through due to supplier price increases and higher fuel costs.

Centrica said it had agreed to pay £20m into Ofgem's voluntary redress fund and further compensate customers whose homes were broken into by debt collectors working for British Gas to illegally fit prepayment meters, in some cases where residents were vulnerable or had disabilities.

British Gas will now review customer records "and provide redress and compensation wherever possible", including payouts to those affected during 2018-21 - in addition to the compensation already paid for the period 2022-23 - alongside the write‑off of up to £70m in energy debt for vulnerable customers.