Societe Generale strategists report that selling pressure on GBP/USD (Cable) has stalled as UK political uncertainty continues, with Prime Minister Starmer resisting calls from Labour MPs and four cabinet ministers to set a timetable for stepping down by September [1]. The threshold of 81 MPs required for a leadership challenge has been met, meaning a contest could be launched at any time, with Health Secretary Wes Streeting seen as a potential challenger before Andy Burnham returns to parliament [1].
On the market front, GBP/USD is finding support around its 100-day moving average at 1.3482, with further support at 1.3420 and resistance at 1.3660 [1]. Despite the political turmoil, pricing for the June Monetary Policy Committee (MPC) meeting remains unchanged since the election last Thursday, with 10 basis points priced in for next month [1]. Gilt yields have shown volatility: the 10-year Gilt yield dipped to 5.06% in early trading, down 7.5 basis points from yesterday's intra-day high, while the 30-year Gilt yield reached 5.814%, its highest level since 1998 [1].
The King’s Speech, which outlines the government's legislative agenda for the coming year, is seen as a critical moment for Prime Minister Starmer to demonstrate authority amid ongoing leadership challenges [1]. Market participants are closely watching these developments, as political uncertainty and elevated yields continue to influence GBP/USD trading dynamics [1].
CONCLUSION
GBP/USD has stabilized near key moving averages as UK political uncertainty persists and Gilt yields remain elevated. The unchanged MPC pricing and the upcoming King’s Speech are focal points for market participants. The situation suggests cautious sentiment, with medium market impact as traders await further clarity on political leadership and monetary policy direction.