FX.co ★ UK-10 Year Gilt Yield Rises Ahead Spending Review

UK 10-year gilt yields have increased to 4.6%, as market participants anticipate a significant fiscal review by Chancellor Rachel Reeves and respond to developments in trade discussions between the US and China. Chancellor Reeves is poised to detail the allocation of approximately £2 trillion in public spending over the coming decade, with plans already noted for enhancements in transport, research and development, correctional facilities, and nuclear infrastructure. Concurrently, trade representatives from the US and China have preliminarily agreed on a framework during talks in London, which seeks to re-establish their tariff truce. US Commerce Secretary Lutnick announced that the framework will now proceed to President Trump for consideration. On the economic landscape, recent employment figures reveal a deceleration in wage growth alongside a rise in unemployment, reaching its highest level in nearly four years. Despite these developments, the Bank of England is largely anticipated to maintain the current interest rate at its meeting next week, with market sentiment reflecting a 90% likelihood of this outcome. However, unexpectedly high inflation data for April adds complexity to any forthcoming decisions regarding potential interest rate reductions.