FX.co ★ UK Long-Dates Gilts Surge Over 20bps

On Wednesday, the yield on the 10-year Gilt saw a significant increase, climbing over 20 basis points to exceed the 4.66% threshold. This came after the yield had tested six-month lows in the previous session, influenced by internal conflicts within the UK's ruling Labour Party that shook confidence in British debt. Prime Minister Keir Starmer did not confirm whether Chancellor Rachel Reeves would retain her position by the time of the next general election, amid questions about the government's key welfare reforms. Uncertainty regarding Reeves' continued management of the UK's Exchequer led to a decline in long-dated Gilts due to fiscal unease, prompting traders to reconsider their expectations of interest rate cuts this quarter. This development occurred shortly after the Bank of England's Governor indicated that the trajectory for interest rates was "downwards" and anticipated a shift towards a "more neutral" monetary policy stance over time, although the endpoint for rates remains uncertain.