FX.co ★ UK Gilt Yields Hit 18-Year High as Rate Bets Rise

UK 10-year gilt yields rose above 5.2%, mirroring a broader global bond sell-off and reaching their highest level since June 2008. The move was driven by climbing oil prices and increasingly hawkish signals from major central banks, which have strengthened expectations that interest rates will remain higher for longer. Brent crude advanced as renewed hostilities in the Middle East intensified worries over potential disruptions to regional energy supplies. Money markets now imply around 32 basis points of additional BoE tightening by year-end, with the probability of a November rate increase nearing 70% and the odds of a second hike by February at roughly 80%. Rate expectations were further bolstered by the latest British Retail Consortium data, which showed UK shop-price inflation accelerating to its fastest pace in two years. At the same time, Fed Chair Kevin Warsh stated that inflation has not slowed meaningfully and that the Fed still has “work to do,” leading markets to assign a 66% probability to a rate hike in September.