FX.co ★ UK Gilt Yields Near Lows as Burnham Pledges Fiscal Discipline

UK 10-year gilt yields hovered around 4.73%, remaining near two-month lows as markets digested a key speech by Andy Burnham. Burnham, the sole candidate to succeed Keir Starmer, pledged that, if elected, he would substantially devolve fiscal powers from Westminster to local authorities while preserving overall fiscal discipline.

In his first major address since securing a Commons seat, Burnham condemned what he described as the UK’s "stark imbalance" between national and local government resources, arguing that this disparity is holding back economic growth. He declined, however, to discuss possible ministerial appointments, saying he will name his team only after the Labour leadership contest has concluded.

Investors are also weighing the implications of an interim US-Iran peace agreement and evolving interest rate expectations in both the UK and the US. The reopening of the Strait of Hormuz has pushed oil prices and inflation forecasts lower, weakening expectations of further Bank of England rate hikes. By contrast, the US Federal Reserve’s hawkish tone continues to underpin forecasts of additional rate increases in the United States.