UK 10-year gilt yields climbed to 4.8%, extending their rebound from the two-month lows hit earlier in the week, as investors digested fresh political developments and central bank signals. Sentiment was shaped in part by Greater Manchester Mayor Andy Burnham’s victory in the Makerfield by-election, where he won 54.8% of the vote, strengthening his profile as a potential challenger to Prime Minister Keir Starmer.
At the same time, the Bank of England voted 7–2 to keep interest rates unchanged at 3.75%, while maintaining a cautious tone amid uncertainty over the economic impact of energy shocks linked to tensions in the Middle East. The central bank reaffirmed its determination to bring inflation under control, but revised down its forecast for peak inflation in the fourth quarter of 2026 to 3.25%, from 3.6% previously. The decision came on the heels of the Federal Reserve’s move to hold rates steady, even as a growing number of Fed policymakers signaled that additional rate hikes later this year remain a possibility.
