Events in Westminster are testing investors’ views that a challenge to the prime minister would be delayed until after next month’s local elections, at the earliest.
Worries over a change of prime minister weighed on gilts and sterling earlier this year, as investors fretted that a more left-leaning leader would relax borrowing limits.
A broader market sell-off since the Iran war has clouded the picture, but the UK’s 30-year borrowing costs — which are particularly affected by anticipation over debt issuance — are back up to 5.5 per cent, close to their highest level in a century.
Gordon Shannon, a fund manager at TwentyFour Asset Management, said it was looking “unlikely that Starmer survives till the end of the year”, but that the situation would need to go “from rumour to an organised challenge” to really move the market.
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