FX.co ★ UK Gilt Yields Fall as Markets Digest Budget

UK 10-year gilt yields declined toward 5.3%, their lowest level in more than a month, as investors evaluated Chancellor John Healey’s first budget. Healey reiterated his adherence to the government’s fiscal rules, with the Office for Budget Responsibility (OBR) estimating fiscal headroom of £15 billion for 2029–30, in line with expectations. Key measures include energy bill support, smaller-than-expected increases in bank taxes, the suspension of tariffs on more than 100 supermarket products, and a 3.9% rise in the minimum wage. The budget also directs an additional £20.4 billion to the National Wealth Fund and the British Business Bank to support investment and 140,000 jobs. At the same time, the OBR lowered its 2027 GDP growth forecast to 1% from 1.6%, citing the economic impact of the war in Iran, while raising its 2026 projection to 1.2% from 1.1%. Forecasts for borrowing and public debt were revised higher across the outlook period.