FX.co ★ UK Gilt Yields Ease but Remain Near Multi-Year Highs

The UK 10-year gilt yield edged down to 5.43% but remained near multi-year highs, as stronger-than-expected labour market data bolstered expectations of a Bank of England rate hike next month. The unemployment rate unexpectedly declined to 4.7% in the three months to August, its lowest level since July 2025, while regular pay growth accelerated to 3.7%, slightly above the 3.6% consensus forecast. These figures followed a series of upside surprises last week, including 0.1% GDP growth in August and an unexpected narrowing of the trade deficit, all pointing to greater economic resilience than previously assumed. At the same time, some major investors anticipate that fiscal discipline will be a key theme in next week’s budget, supporting demand for gilts. Since Andy Burnham became prime minister, UK gilt yields have risen by less than those in several other major bond markets, underscoring relatively stronger investor confidence in the UK’s fiscal outlook.