FX.co ★ UK 10-Year Gilt Yield Rises to 1-Month High

The yield on the UK 10-year gilt has risen to nearly 4.7%, reaching its highest point in a month. This increase comes as investors evaluate recent domestic employment data amidst persistent global trade uncertainties. Despite a temporary suspension of tariffs between the US and China lasting 90 days, market volatility persists due to uncertainties regarding future trade relations. Economically, the UK has experienced an increase in the unemployment rate to 4.5%, marking the most significant climb since 2021. Additionally, wage growth has decelerated, which has strengthened the belief that the Bank of England may continue its policy easing. This labor market data aligns with recent statements from Bank of England officials who have identified wage pressures as a significant inflationary concern. Alan Taylor, a policymaker at BOE, noted that interest rates still have a considerable way to go before they are no longer restrictive. Although the central bank reduced interest rates by 25 basis points last week, the unexpected division in the voting pattern has introduced uncertainty regarding the future trajectory of rate reductions.