The UK 10-year gilt yield eased to 4.95%, although it remained close to a two-month high, as crude prices retreated on signs of renewed diplomatic efforts between the US and Iran.
Even so, oil remained near one-month highs after the two countries exchanged retaliatory strikes, keeping inflation concerns elevated and reinforcing expectations that the Bank of England will maintain a tighter policy stance for longer.
Meanwhile, Andy Burnham officially became the UK’s Prime Minister on Monday after accepting King Charles III’s invitation to form a government.
Burnham, who stood unopposed in the Labour leadership contest following Keir Starmer’s resignation, is the UK’s seventh prime minister in the past decade and the second since Labour returned to power in 2024.
Markets are now focused on Burnham’s choice of Chancellor.
Reports that Shabana Mahmood is the leading candidate have reassured investors, easing concerns that the new government could pursue a more expansionary fiscal agenda.