FX.co ★ UK Gilts Steady Below 4.9%

UK 10-year gilt yields remained below 4.9% as oil prices declined and investors turned cautious, awaiting signs of progress in Middle East peace talks. Markets are closely watching US–Iran negotiations, amid persistent concerns over Iran’s enriched uranium program and the fragility of the Lebanon ceasefire. Nonetheless, some investors are positioning for a broader de-escalation in the US–Israeli confrontation with Iran.

On the domestic political front, Greater Manchester Mayor Andy Burnham has, for the first time, explicitly confirmed his ambition to challenge Keir Starmer for the role of UK prime minister. Starmer has stated he will not resign. Burnham’s leadership challenge is contingent on winning the Makerfield by-election on 18 June, which would give him a seat in Parliament and make him eligible to contest the party leadership.

In monetary policy, markets are currently pricing in nearly two Bank of England rate hikes this year, with the first move widely expected in September. Policymakers face the challenge of containing rising inflation while responding to early indications of a cooling labour market.