Sterling declines after a new contender enters the race to replace the UK prime minister, lifting 10-year Gilt yields above 5%.
The British pound slumped as political uncertainty intensified following a new bid to replace the UK prime minister. The move triggered a reversal in UK bonds, with 10-year Gilt yields climbing back above 5% after an initial rally earlier in the day.
Prior to the announcement, markets had shown resilience, but the emergence of a fresh leadership challenge disrupted sentiment. The 10-year Gilt yield had briefly dipped before rebounding, reflecting investor caution amid shifting political dynamics.
The pound’s decline underscores concerns over potential policy shifts and their impact on fiscal stability. Market participants are closely monitoring developments as the leadership contest unfolds.