11:54 AM EDT, 05/18/2026 (MT Newswires) -- London's FTSE 100 closed 1.26% higher on Monday as the International ​Monetary Fund increased its 2026 growth forecast for the UK to 1% from 0.8%, while investors also monitored political developments surrounding Prime Minister Keir Starmer.

"In the UK, Labour's decision to let [Mayor of Greater Manchester] Andy Burnham seek a return to parliament sharpens the leadership crisis facing Prime Minister Keir Starmer after heavy local election losses, which have already prompted intensified calls for him to resign,"Danske Bank said.

"The risk is that a new, further left, prime minister pursues policies that further add to business costs, eroding profit margins and putting upward pressure on inflation,"according to Berenberg. "Were a new prime minister to water down or abandon fiscal tightening at the same time, the [Bank of England] would have to set higher interest rates to prevent excess demand and inflation. The resulting combination of higher interest rates and lower profits would result in an inadequate rate of return for companies to invest and hurt the UK's long-term growth prospects."

Meanwhile, the UK government and the Gulf Cooperation Council are reportedly nearing a free trade agreement after years of talks, according to London's Financial Times. In an emailed statement to MT Newswires, a UK government spokesperson said negotiations are continuing and remain a priority for the government.

In corporate news, mining major Anglo American (AAL.L) dropped 1.36% after agreeing to sell its Australian steelmaking coal mines to Dhilmar for up to $3.88 billion in cash.

Pharmaceutical giant GSK (GSK.L) gained 0.75% as Japan's health regulator expanded the eligible age range for its respiratory syncytial virus vaccine, Arexvy, to include at-risk patients aged 18 to 49.

Investors will also look ahead this week to UK unemployment data for March on Tuesday, April inflation figures on Wednesday, S&P Global PMI data for May on Thursday, and retail sales numbers on Friday.