The interest rate on 30-year UK government bonds reached the highest level since 1998 Tuesday, as investors fretted over soaring energy prices caused by the Middle East war.
The yield surged to more than 5.77 per cent as UK traders caught up with gains across international bond markets Monday when Britain had a public holiday.
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The UK rate has won support also from expectations that the Labour Party, led by Prime Minister Keir Starmer, will suffer big losses in local elections Thursday.
“There is some catch-up in the UK market after yesterday’s holiday,” Jane Foley, Rabobank’s head of foreign exchange strategy, told AFP.
“While the move in the… market appears to be primarily driven by fears of rising hostilities in the US/Iran war, the UK is facing domestic political risks in the form of this week’s election.”
Foley said that “betting odds strongly suggest that PM Starmer will be replaced this year.
“Odds also favour a candidate from the left wing of the party, which could create headwinds for UK asset markets,” she added.
AFP
