FX.co ★ UK 10-Year Gilt Yield Rebounds on Wednesday

On Wednesday, the yield on the UK 10-year gilt increased to 4.73%, reversing a two-day decline and reflecting the trend of rising US Treasury yields amid global concerns following the first US government shutdown in nearly seven years. In terms of monetary policy, there are differing opinions among the Bank of England (BoE) policymakers. Catherine Mann expressed concern that persistent inflation is becoming entrenched, with companies transferring higher labor costs to consumers. Conversely, Deputy Governor Sarah Breeden advised against maintaining elevated interest rates for an extended period, citing potential risks to economic growth. The BoE maintained steady interest rates in September, and market predictions suggest no rate cuts until 2026. On the political front, Chancellor Rachel Reeves is reportedly planning to eliminate the two-child benefit cap in the upcoming November budget. This move is anticipated to cost £3.5 billion annually but is expected to significantly reduce child poverty. To finance this change, there is growing speculation about possible tax increases, including potential adjustments to gambling duties.