[MARKET ANALYSIS] UK debate & vote on whether PM Starmer should be referred to the Privileges Committee

Today, The House of Commons will hold a debate and then vote on whether PM Starmer should be referred to the Privileges Committee or not. The debate begins at around 12:30BST, exact time subject to proceedings beforehand, there is no time limit for the debate itself, and the vote will follow immediately after. By way of a proxy, the debate around former PM Johnson took c. five hours.
The Labour Party has placed a three-line whip on the vote, meaning that Labour MPs need to vote to oppose the motion to refer Starmer to the committee, or they risk consequences which could include expulsion from the Labour Party. The government is confident that they will have enough support to see off the vote, with the view among enough Labour MPs being that such a referral is an easy win for the opposition and a bad sign into the already gloomy May 7th local elections. However, Labour MPs dissenting from the whip and voting for the referral will damage the PM further.
For Starmer, a referral does not mean he broke the rules of the Privileges Committee. However, it does mean they will investigate his parliamentary conduct, an investigation that could determine he mislead the House with respect to the ongoing Mandelson inquiry. While a ruling from the Committee does not carry direct consequences for the PM, it has previously brought down governments such as the aforementioned premiership of Conservative PM Starmer.
Ahead, the May 7th local elections are the point to watch and a particularly bad showing for Labour could see a formal leadership challenge made against Starmer; currently, the main name in contention is Rayner, with recent reporting suggesting a granita-style pact with Burnham. Polling for the election points to marked Labour losses, with Reform and Greens expected to benefit. For London, the YouGov MRP points to "historic losses for Labour".
For assets, a referral to the Privileges Committee will likely weigh on UK assets, in an extension of the move seen on Monday when sources reported that such a debate would occur; as a reminder, Gilts were hit with GBP/USD also coming under pressure at the time. While a non-referral will provide some respite, the looming local elections and potential for formal leadership challenge(s) thereafter mean it may prove temporary.