FX.co ★ UK 10-Year Gilt Yield Edges Down

The yield on the UK's 10-year gilt has slightly decreased to 4.59%, as market expectations tilt towards a potential rate cut by the Bank of England in August, despite inflation remaining above 3%. Recent economic indicators have revealed signs of weakening, with GDP contracting by 0.1% in May after a 0.3% decline in April, heightening concerns about a contraction in the second quarter. The sectors of manufacturing and construction have experienced significant output declines. This economic downturn follows the tax increases implemented in April and the global market disruptions triggered by US President Trump's tariffs, which included a 10% levy on UK exports. Although the UK has now secured a trade agreement with the US, domestic economic challenges persist. The Bank of England has already reduced rates from 5.25% to 4.25% over the past year, and current market conditions suggest an 80% probability of another rate reduction in August. BOE Governor Andrew Bailey has indicated a gradual approach to easing monetary policy, though he remains cautious regarding the precise timing of future adjustments.