Danske Research Team highlights that EUR/GBP moved higher as United Kingdom (UK) political uncertainty intensified. Over 90 MPs called for Prime Minister Starmer to resign and several ministers and aides stepped down. Bond markets fear looser fiscal policy and potential leadership change, which lifted Gilt yields and led markets to price a more hawkish Bank of England (BoE) stance.
UK politics lift cross higher
“In the UK, more than 90 MPs called for PM Starmer to step down, and four ministers handed in their resignation yesterday.”
“Bond markets fear looser fiscal policy in case of a change of leadership, which drove 30Y Gilt yields to the highest levels since 1998.”
“If Starmer resigns, it could also open up for a more hawkish policy stance from the Bank of England, which was reflected in market pricing yesterday.”
“EUR/GBP was on the rise following mounting pressure for UK PM Starmer to resign.”
“With up to 80 Labour MPs having called for Starmer to resign and six ministerial aides quit yesterday, prediction markets have ramped up bets of Starmer being out to around 70% by June and 85% by YE 2026.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Source: https://www.fxstreet.com/news/british-pound-lower-against-euro-on-uk-political-turmoil-danske-bank-202605130730
