MARKET REPORT
Starmer under pressure as Gilt Yields Hit 1998 Highs
To talk to us about your next trade, call 020 7778 7500 or hit the button below
Email us
- UK political crisis escalates: three Cabinet ministers call on Starmer to resign as Labour rebellion deepens overnight
- US CPI prints in focus today: headline expected at 3.7% YoY as Iran ceasefire hangs on "massive life support"
Recap
USD was volatile as US-Iran negotiations remained stalled. Trump described the ceasefire as on "massive life support" after rejecting Tehran's latest peace offer. The USD Spot Index rose 0.2% as oil advanced 0.7%.
GBP remained under severe pressure: 30-year gilt yields rose almost 10 basis points to 5.68%, their highest since 1998, as the Labour rebellion intensified dramatically overnight. At least three Cabinet ministers, including Home Secretary Shabana Mahmood, have called on Starmer to consider his position. More than 70 Labour MPs have publicly demanded his resignation, with four ministerial aides quitting the government. Starmer holds a crucial Cabinet meeting this morning –Health minister Kinnock suggested more cabinet members "may well" call for his resignation during today's talks. GBPUSD fell overnight by 0.21%. The market's core concern remains unchanged – a new Labour leader shifting left and hiking spending would drive up gilt issuance and push yields higher still. The parallels with the 2022 Liz Truss crisis are not lost on markets.
EUR found some support as ECB Governing Council member Kocher stated a rate increase will be "unavoidable in the near future", keeping the June hike narrative alive and providing a floor for EUR crosses.
Today
Market rates
*Daily move - against G10 rates as of 5pm BST on 11.05.26
** Indicative rates - interbank rates as of 5pm BST on 11.05.26
Data points
Click here for a calendar of upcoming economic events Our thoughts
Today has two defining events for GBP: this morning's Cabinet meeting and this afternoon's US CPI.The Cabinet meeting is the immediate focus for GBP. If Starmer loses the support of his Cabinet, a leadership contest becomes significantly more likely – under party rules, any challenger needs 81 Labour MPs to trigger a contest. Andy Burnham is widely expected to be a leadership candidate, with Labour officials reportedly backing away from blocking his return as an MP. Any escalation in the crisis would add further political risk premium to GBP and push gilt yields higher.
US CPI prints at 13:30 with headline inflation expected at 3.7% YoY – driven by the Iran conflict's continued impact on energy prices. The Senate is also expected to vote on Kevin Warsh's Fed Chair confirmation this week, adding further uncertainty around future Fed policy direction.
German ZEW sentiment also prints this morning, expected to deteriorate further to -19.9 from -17.2, adding to the Eurozone stagflation narrative ahead of the ECB's June meeting.
How we can help
Our team of currency experts are here to help you get more from your money when making international payments. We will work with you to understand your payment needs and offer specialised guidance on the best options available to you. Over the last 20 years we’ve helped over a million customers and last year alone processed over £12bn. We’re tried and trusted, and we’re ready to help you.
Get in touch with our team today on +44 (0)20 7778 7500 or email dealingdesk@equalsmoney.com.
