UK government bonds and sterling fall as pressure on Starmer rises

Thirty-year gilt yields hit their highest level since 1998 as nearly 80 Labour MPs call for the Prime Minister's resignation, rattling markets and the pound.

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Add us on Google by Editorial Team May. 13, 2026

Britain’s bond market just flashed a warning signal that investors haven’t seen in nearly three decades. The 30-year gilt yield surged to 5.825% on May 12, the highest it has been since 1998, while the 10-year yield climbed to 5.13%, a peak not reached since the 2008 financial crisis.

The catalyst isn’t an external shock or a central bank surprise. It’s politics. Approximately 80 Labour MPs have called for Prime Minister Keir Starmer to resign following the party’s bruising losses in local elections, and markets are repricing the risk of governing a country whose leadership may be in freefall.

What’s actually happening in gilt markets

Sterling fell alongside the bonds, declining against the dollar as traders connected the same dots. The FTSE and broader equity markets also dropped on May 12, completing a trifecta of bad news across UK asset classes.

For context, the last time UK bond markets moved this aggressively on political uncertainty was September 2022, when Liz Truss’s mini-budget sent gilt yields spiraling and ultimately ended her 49-day premiership. The current selloff hasn’t reached that level of acute panic, but the direction is unmistakable.

The political backdrop

Nearly 80 Labour MPs demanding a sitting Prime Minister’s resignation is not a minor backbench grumble. This marks the largest backbench rebellion since Starmer took office. That’s a substantial faction of the parliamentary party, enough to make governance functionally difficult even if Starmer survives the immediate pressure.

This situation has a different character from the Truss crisis. The Truss crisis was triggered by a specific, identifiable policy mistake: unfunded tax cuts that spooked the bond vigilantes. The current pressure on Starmer is more diffuse, rooted in electoral performance and party management rather than a single fiscal decision.

For crypto-native investors, the UK bond market turmoil is worth watching for a different reason entirely. The pound’s weakness against the dollar also matters for UK-based crypto investors whose portfolios are denominated in sterling. A falling pound means dollar-denominated assets like Bitcoin effectively become more expensive to acquire, but existing holdings gain value in local currency terms.

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