FX.co ★ UK Gilt Yield Holds Above 5% After Healey’s Surprise Chancellorship

The UK 10-year gilt yield held just above 5%, unchanged from the previous session, after Prime Minister Andy Burnham unexpectedly named former defence secretary John Healey as chancellor. Healey’s surprise appointment, despite not being a market favourite, may signal a shift toward higher defence spending.

On policy, Burnham has so far pledged to cut taxes on energy bills, funded by scrapping the Digital ID programme. Separately, ONS data showed public sector net borrowing at £16 billion in June, a one-third drop from a year earlier and lower than economists had forecast.

In the labour market, wage growth eased to 4.3% in the three months to May, slightly below expectations, while the unemployment rate held at 4.9%. Investors are also tracking developments in the Middle East, where recent escalations have been followed by renewed hopes for US–Iran diplomacy.