2026.02.0910:07:11UTC+00UK 10-Year Gilt Yields Rise on Political Uncertainty

UK 10-year gilt yields climbed further above 4.5%, extending a bout of volatility as mounting political uncertainty weighed on markets. Concerns over Prime Minister Keir Starmer’s leadership intensified following the resignation of his chief of staff amid the controversy involving Lord Peter Mandelson. Starmer has faced renewed internal pressure to step down from within a fractious Labour Party, particularly over his decision to appoint Mandelson as UK ambassador to the US, given Mandelson’s historical links to Jeffrey Epstein.

Nonetheless, Skills Minister Baroness Smith sought to quell speculation about Starmer’s future, insisting he remains focused on domestic priorities. At the same time, markets have increased their expectations for Bank of England interest rate cuts. Although the central bank left rates unchanged at 3.75% in a split decision, policymakers struck a more dovish tone than anticipated, signalling that CPI inflation is likely to move back toward the 2% target from April.