FX.co ★ UK 10-Year Gilt Yield Pulls Back from 10-Week High

The yield on the UK's 10-year government bonds decreased to approximately 4.505%, retreating from its ten-week high of 4.5527% recorded on January 28. This decline comes as the market anticipates this week's policy meeting of the Bank of England. Investors expect the Bank to maintain the interest rate at 3.75% on Thursday, with minimal guidance on when future rate cuts might occur, as inflation remains elevated. December's inflation rate of 3.4%, the highest among the G7 countries, coupled with ongoing concerns about underlying inflationary pressures, has led investors to diminish their expectations for monetary policy easing. Currently, traders see almost no likelihood of a rate cut this week and estimate less than a 50% chance of more than one rate cut within the year, a shift from the double cut expectation seen in mid-January. The recent resilience in UK economic data, including better manufacturing PMI figures and steady economic growth, bolsters the view that the Bank of England can afford to adopt a cautious approach.