London: A sharp sell-off in UK government bonds and a steep decline in the pound have rattled financial markets this afternoon, as political instability in Westminster deepens. The yield on the 10-year gilt rose by 15 basis points to 4.85%, the highest level since November 2023, while sterling fell 1.
2% against the dollar to $1.2340. The moves come as Prime Minister Rishi Sunak faces mounting calls for his resignation from within his own party, following a series of leaked recordings that appear to show cabinet ministers discussing a plot to oust him.
The recordings, published by The Guardian, have fuelled speculation of an imminent leadership challenge. Market participants have reacted with alarm, fearing a prolonged period of political uncertainty that could derail the government's fiscal plans. Analysts at Goldman Sachs described the situation as a 'crisis of confidence' in UK policymaking, warning that further turbulence is likely unless a stable leadership is restored.
The Treasury has declined to comment, but sources close to the Chancellor have indicated that emergency contingency plans are being reviewed. The sell-off has also spread to other UK assets, with the FTSE 100 falling 1.5% in afternoon trading.
The Bank of England has not yet intervened, but traders expect a statement later today.
