FX.co ★ UK Gilts Recover Ground After Steep Selloff

UK gilts recovered some ground on Wednesday following recent selloffs, with the 10-year gilt yield easing to 5.08% after touching an 18-year high of 5.13% in the previous session. The 30-year gilt yield also edged lower to 5.75%, pulling back from its highest level in 28 years. Sentiment was supported by a modest decline in oil prices and the absence of a serious leadership challenge to Prime Minister Keir Starmer, whose cabinet remained largely unchanged despite the resignation of several junior ministers the day before. Starmer has reiterated his intention to remain in office, even as more than 70 Labour MPs have urged him to step down following the party’s weak showing in local elections. Markets remain wary that a change in leadership could trigger higher fiscal spending as the party seeks to regain voter support. On the monetary policy front, investors are currently pricing in nearly three Bank of England interest rate hikes by the end of the year.