Relief over Labour leader’s survival eases political uncertainty, pushing 10-year gilt yields to a two-week low of 4.88%.
UK 10-year gilt yields fell 5 basis points to 4.88% after Labour leader Keir Starmer pledged to remain in office despite heavy local election losses. The retreat followed a surge to multi-decade highs earlier in the week amid speculation of a leadership challenge.
Labour lost control of at least eight councils, while Reform UK and the Greens made gains. The Conservatives also suffered losses. Despite the setback, Starmer’s commitment to complete his five-year term eased immediate political instability fears.
Sterling rose 0.5% to $1.36, and 30-year yields dropped from a 1998 high of 5.79% to 5.55%. Markets reacted to reduced risks of a leftward policy shift or snap election.