FX.co ★ UK Gilt Yields at 18-Year High on Political and Inflation Risks

UK government bond yields surged, with the 10-year gilt rising above 5.1%—its highest level since July 2008—and the 30-year yield climbing to 5.8%, a peak not seen since 1998. The moves came amid mounting political uncertainty and renewed concerns over inflation. Prime Minister Keir Starmer has insisted he will stay in office despite calls from more than 70 Labour MPs for his resignation following the party’s weak performance in local elections. Investors worry that any change in leadership could prompt looser fiscal policy as the party seeks to rebuild voter support, potentially leading to higher public spending. Starmer, however, stressed that no formal leadership challenge has yet been launched. At the same time, market participants are ramping up expectations for additional Bank of England interest rate increases, with futures now implying close to three further hikes by the end of the year. Adding to the inflationary backdrop, Brent crude has climbed above $105 per barrel after US President Trump rejected Iran’s latest peace proposal as unacceptable.