British government bond investors will keep an eye on political developments in the UK.

Patrick Munnelly of the Tickmill Group stated in a report that as investors in UK government bonds search for clues about future fiscal policies, they may focus on domestic politics and any potential challenges to Prime Minister Keir Starmer's leadership. "The market is already sensitive to leadership news, as competition in the post-Starmer era could lead to a more expansionary fiscal stance," Munnelly said. If there is a leadership struggle, "the issue for UK government bonds is not whether Labour is left-wing, but how left-wing and how quickly this translates into fiscal credibility risks. Data from Tradeweb shows that the yield on the 10-year UK government bond has dropped by 1.3 basis points to 5.055%, after reaching an 18-year high of 5.135% earlier this week.