The Green party’s landmark victory in the Gorton and Denton byelection has not rocked the financial markets.

Sterling is slightly higher against the US dollar, up $0.02 at $1.3505, despite the fresh pressure on Keir Starmer after Labour came third at the polls overnight.

The pound is flat against the euro, at €1.1424, having hit its lowest level of the year earlier today.

UK government bonds are flat in early trading too.

Daniela Hathorn, senior market analyst at Capital.com, says one by-election upset alone is unlikely to trigger sustained sterling weakness unless it becomes part of a broader trend.

But the pound could weaken if there is a perception of rising political fragmentation, especially if it increases the probability of leadership uncertainty or fiscal ambiguity.

Hathorn says:

“The headline signals more than just a local political upset, it reinforces the narrative of fragmentation within UK politics at a time when markets are highly sensitive to policy stability. A by-election result that pushes Labour into third place, particularly behind both the Greens and Reform UK, raises questions about the party’s cohesion and broader electoral positioning.

For markets, the issue is not necessarily the immediate seat count, but what it implies about political momentum, leadership authority and future policy direction. If leadership challenges or internal divisions intensify, uncertainty around fiscal plans, regulatory reform and economic strategy could rise.

Depressing market move of the day: Shares in tech company Block have surged after it announced it is cutting 40% of its staff.

Co-founder Jack Dorsey has blamed the cuts on the rise of “intelligence tools,” as he reshapes Block – the firm behind Square, Cash App and Afterpay – to capitalize on its use of artificial intelligence.

Dorsey told shareholders:

“The core thesis is simple. Intelligence tools have changed what it means to build and run a company.

A significantly smaller team, using the tools we’re building, can do more and do it better.”

The company is laying off more than 4,000 people, reducing the workforce to just under 6,000.

Block’s shares surged 23.52% in after hours trading…

Analysts suspect that regulators, such as California Attorney General Rob Bonta, could attempt to challenge Paramount’s takeover of Warner Bros Discovery.

Bonta, a Democrat, said late on Thursday that his office would take a ‘vigorous’ approach to the deal.

In a statement issued Thursday evening, Bonta said:

“Paramount/Warner Bros is not a done deal. These two Hollywood titans have not cleared regulatory scrutiny — the California Department of Justice has an open investigation, and we intend to be vigorous in our review.”

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

Every good drama needs a few twists and turns. And the race for ownership of Warner Bros Discovery has certainly delivered.

Overnight, Netflix has walked way from the deal, declining to match a new, improved takeover offer from its rival, Paramount Skydance.

Netflix’s hopes were blown away by Paramount lifting its offer for the whole of Warner Bros to $31 per share, beating Netflix’s bid of $27.75 per share for Warner Bros’ streaming and studio assets.

Backing out of the bout, Netflix said:

“We’ve always been disciplined, and at the price required to match Paramount Skydance’s latest offer, the deal is no longer financially attractive, so we are declining to match the Paramount Skydance bid.”

Netflix’s shares have surged by 8.5% in after hours trading, suggesting relief that the streaming company has not risked overpaying for Warner Bros.

Netflix’s shares had fallen by almost a third over the last six months.

This clears way for Paramount to win WBD’s assets, including Warner Bros, the studio behind franchises including Harry Potter, Superman and Batman, as well as HBO, home to shows including Game of Thrones, The White Lotus and Succession.

It would also give Paramount, owned by Larry Ellison (a friend of Donald Trump) ownership of CNN – he already controls rival news network CBS.

Any deal still need to win regulatory approval, though, so this may not be the final act in the Warner Bros Discovery story…..

The agenda

• 7am GMT: Sweden’s GDP report for Q4 2025

• 10.30am GMT: India’s GDP report

• 1pm GMT: Bank of England chief economist Huw Pill: Panellist at Elgin Advisory and Society for Professional Economists ‘UK & US economics’ webinar

• 1.30pm GMT: Canada’s GDP report for Q4 2025

• 1.30pm GMT: US producer prices inflation report for January