FX.co ★ UK Gilt Yields Fall to Six-Week Low

UK 10-year gilt yields extended their decline below 5.3%, hitting their lowest level since 22 September, as weaker oil prices and anticipation of this week’s Bank of England policy decision underpinned the bond market. Brent crude slipped under $110 a barrel after reports that US President Donald Trump was prepared to allow more time for diplomatic efforts with Iran before considering further military action following Tuesday’s midterm elections. At the same time, investors continued to respond positively to Chancellor John Healey’s first budget last week, which complied with the government’s self-imposed borrowing rules and largely reassured markets. The Bank of England is widely expected to deliver its first interest rate increase since 2023 on Thursday, amid mounting inflationary pressures linked to the Iran conflict and ongoing signs of resilience in the UK economy. However, policymakers are also expected to push back against market expectations for multiple additional rate hikes next year.