14.05.202606:50:53UTC+00UK Gilt Yield Nears 2008 High on Leadership Uncertainty

The UK 10-year gilt yield rose toward 5.1%, approaching its highest level since 2008, as speculation mounted over a possible leadership challenge to Prime Minister Keir Starmer. Reports indicate that Health Secretary Wes Streeting — widely viewed as the most market-friendly contender — may resign this week and could launch a bid to replace Starmer as early as today. At the same time, Angela Rayner, another potential challenger, was cleared this morning by HMRC in a tax investigation, potentially removing a key obstacle to her entering the race. While markets generally regard Streeting as supportive for gilts, Rayner’s more left-leaning stance is seen as comparatively less favourable.

Gilt markets also faced pressure from global developments. Stalled US–Iran negotiations and the closure of the Strait of Hormuz have kept oil prices elevated, with investors now pricing in nearly three additional Bank of England rate hikes by year-end. On the data front, the UK economy outperformed expectations: GDP expanded by 0.6% in Q1 2026, with annual growth at 1.1%. The surprise 0.3% increase in March was the main driver of the stronger-than-anticipated quarterly result.