The UK 10-year gilt yield slipped to 4.95%, though it remained close to a two-month high, as crude oil prices retreated on signs of renewed diplomatic efforts between the US and Iran. Nevertheless, oil prices stayed near one-month highs after the two countries exchanged retaliatory strikes, keeping inflation concerns elevated and reinforcing expectations that the Bank of England will maintain tighter monetary policy for longer.
On the political front, Andy Burnham officially became UK Prime Minister on Monday after accepting King Charles III’s invitation to form a government. Burnham, who faced no challengers in the Labour leadership contest following Keir Starmer’s resignation, is the country’s seventh prime minister in the past decade and the second since Labour returned to power in 2024. Market attention is now centred on his choice of Chancellor. Reports that Shabana Mahmood is the frontrunner have reassured investors, easing fears that the new government might adopt a more expansionary fiscal stance.
