FX.co ★ UK Gilt Yield at Two-Month High

The yield on the UK's 10-year government bonds, known as gilts, has steadied at just over 4.55%—a peak not seen since November 2020. This comes as financial markets anticipate that both the Bank of England and the Federal Reserve are likely to maintain their current interest rates for the near future. In Britain, recent data from the British Retail Consortium has highlighted increasing price pressures, which raises concerns about persistently high inflation. This could potentially restrict the Bank of England's ability to reduce interest rates anytime soon. Nonetheless, a recent strengthening of the UK pound, largely due to a weaker US dollar, may help mitigate inflation from imported goods and bolster inflation expectations, which might counter some of the domestic price growth challenges. Concurrently, the Federal Reserve has opted to keep interest rates steady, aligning with market forecasts. Federal Reserve Chair Jerome Powell hinted that the bank is set to keep this policy for a while, based on indicators of stabilizing unemployment and inflation that, while still high, shows signs of settling.