UK 10-year gilt yields declined to 4.78%, their lowest level since April 17, as oil prices fell sharply on renewed hopes of a preliminary US–Iran peace agreement. A framework deal — which would include lifting the US blockade and reopening the Strait of Hormuz — is expected to be signed in Switzerland on Friday, although key details concerning Iran’s nuclear program remain unresolved.
In the run-up to the Bank of England’s closely watched policy announcement on Thursday, markets anticipate a narrowly split vote to keep interest rates unchanged, as policymakers balance persistent inflationary pressures against a softening labour market and subdued economic growth. Traders have pared back expectations, now forecasting only one rate increase this year, with a 25-basis-point move not fully priced in until December.
