DLP with sensitivity Label

I have enabled a DLP policy to block all unclassified PDF files from being shared with external on SPO.
I have selected the condition:
- Fileextension:PDF
- Shared with people outside my organisation
As Exclude:
- All sensitivity labels
Unfortunately, in SharePoint all documents are blocked from being shared with external people, including office documents and classified PDFs. Can anyone tell me why this is happening? It looks like it is ignoring most conditions.