⚖️🇬🇧GBP/USD Not Tracking Yield Differentials Higher: Cable FX Macro

• Rising gilt yields are driven heavily by higher term premium from UK political instability (Starmer/Labour leadership crisis after poor local elections, fiscal credibility concerns, potential policy shifts) and sticky inflation risks (energy pass-through from Middle East tensions/oil >$100).Markets interpret this as a risk premium (investors demanding more yield to hold UK debt due to uncertainty), not genuine economic strength. This acts like a “tax” on holding GBP rather than a reward, this is currently translated into softer trading in sterling and demand of downside structures.