FX.co ★ UK 10-Year Gilt Yield Rises to 3-Week High

The yield on the UK 10-year gilt has climbed to 4.57%, marking its highest point in three weeks. This increase stems from investors revising their expectations about potential interest rate cuts amidst a broader global revaluation in bond markets. This shift indicates heightened caution as key central bank meetings, including the Federal Reserve's, approach. Additionally, optimism that policy easing would continue extensively into 2026 is waning. In the UK and across Europe, bond yields are on the rise as market participants reduce their expectations for easing by the Bank of England, while current pricing suggests there's approximately a 50% probability that the European Central Bank might increase rates by the end of 2026, with no rate cuts anticipated. Domestically, there hasn't been enough UK-specific data to warrant such a market adjustment, implying that global influences are primarily driving the gilt market. Recent comments from BOE officials provided no significant surprises, and despite a cooling inflation rate, this trend has yet to be mirrored in market pricing, resulting in sustained pressure on longer-maturity yields.