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Pound Falls, Long-Dated Gilt Yields Rise as Pressure Builds on Starmer

Traders price a greater political risk premium on fears a leadership change could loosen fiscal restraint.

Overview

  • Ten-year gilt yields hovered near 4.59% while 30-year yields reached roughly 5.38%, reflecting heavy selling in longer-dated debt.
  • The two‑ to ten‑year yield gap widened to its largest in nearly eight years as shorter maturities firmed.
  • Sterling slipped toward $1.36 against the dollar, ranking among the day’s weakest major currencies.
  • The Bank of England kept Bank Rate at 3.75% after a narrower-than-expected vote, bolstering short-end gilts.
  • Pressure on Keir Starmer escalated over the Peter Mandelson appointment and Epstein links, with some Labour MPs calling for his resignation and strategists questioning fiscal credibility.