FX.co ★ UK 10-Year Gilt Yield Moves Lower

The yield on UK 10-year gilts declined to 4.64%, aligning with movements in other European sovereign bonds. Despite underperforming the previous day due to concerns over US debt, UK bonds showed slightly better performance today. Bank of England's Huw Pill advised against hasty reductions in interest rates, describing his recent vote to maintain rates as a "skip" rather than an indication to cease easing measures. Meanwhile, BoE's most dovish member, Swati Dhingra, justified her vote for an unusual yet intentional 50 basis points cut, highlighting that the current rates are excessively high. In contrast, the majority of the committee in May opted for a 25 basis points reduction, bringing the base rate down to 4.25%. Looking ahead, attention is on Thursday’s preliminary Purchasing Managers' Index (PMI) reports, which are anticipated to show a milder downturn in manufacturing and a smaller shrinkage in the services sector. Additionally, April's inflation is projected to climb to 3.3%, with core CPI expected to reach 3.6%. Retail sales are predicted to increase by 0.4%, continuing a positive trend despite prevailing low consumer confidence.