FX.co ★ UK 10-Year Gilt Yield Rises to 4.7%

The yield on the UK 10-year gilt has climbed to 4.7% amid escalating global uncertainties sparked by a revival of trade tensions between the United States and China. This surge follows President Trump's announcement of plans to double tariffs on steel and aluminum imports. In response, China has accused the US of violating a recent trade agreement and has pledged to counteract, unsettling market confidence and prompting investors to seek refuge in safer assets. Concurrently, the UK government has revealed a new defense strategy that includes an allocation of £15 billion aimed at expanding its fleet of attack submarines and nuclear warhead capabilities as part of the AUKUS alliance with the US and Australia, a strategic move aimed at countering Russian threats. On the economic landscape, inflationary pressures persist, with grocery prices increasing by 4.1% in May, marking the highest rise since February 2024, as reported by Kantar. Currently, market expectations have shifted to anticipate a 40 basis point reduction in interest rates from the Bank of England by the close of the year.