[ANALYSIS] UK Gorton and Denton by-elections: Greens win, eyes now on any challengers for the Labour leadership role

What happened?

• The Green Party, Labour’s left-wing rival, won its first seat in the North of England after securing 40.7% of the votes.
• Gorton and Denton has been a Labour stronghold for almost 100 years, which made this by-election one to watch as a sentiment gauge for future by-elections and the local election that is set to take place on May 7th.
• Not only did Labour lose this seat, but the Party also placed third behind Reform (28.7% for Reform, 25.4% of Labour).

Future outlook for Labour:

• This puts more pressure on PM Starmer, after it was his decision to block Manchester Mayor Andy Burnham (who some consider more popular than the PM himself) from standing to be Labour’s candidate.
• The local elections in May will be a critical point for Labour, with the Party now needing to fight off parties on both sides of the political spectrum.
• Internally, this could spur a challenge for the top job. Health Secretary Streeting and former Deputy PM Rayner (both previously touted to challenge for the leadership role) can use this role to boost their campaign. On the other hand, they may wait until the local elections in May.

Market Reaction:

• Reaction in GBP/USD was muted after the results were announced. 
• Analysts at Goldman Sachs believe this is already priced into the market, resulting in a muted reaction at the open.