FX.co ★ UK Gilt Yields Remain High on Rate Hike Bets

The yield on the UK 10-year gilt hovered just above 4.7%, after touching its highest level since early September on Friday, as persistent tensions in the Middle East intensified uncertainty over the Bank of England’s policy stance ahead of this week’s decision. Israeli officials cautioned that the conflict could drag on for “several more long weeks,” while US President Donald Trump said Iran is “not ready” to reach a deal. Rising energy prices have prompted traders to reassess their interest rate outlook, with markets now pricing in about 23 basis points of tightening for December—just shy of a quarter-point hike—after having fully priced in an increase last week. This marks a sharp reversal from early March, when investors were expecting two rate cuts this year. For the upcoming March meeting, attention will center on the vote split, with a 7–2 or 6–3 decision to keep rates on hold seen as the most probable outcome.