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

UK 10-year gilt yields have eased to 4.623% following remarks by Bank of England Governor Andrew Bailey. Bailey indicated that should the labor market face further strain, the central bank might opt for a more aggressive reduction in interest rates. He emphasized that the economy is expanding at a pace below its potential, which is leading to a degree of slack and should aid in tempering inflation. He reiterated the trajectory of declining interest rates, with potential for expedited cuts if economic conditions worsen. Attention is now turning to the forthcoming labor and inflation statistics from the Office for National Statistics expected this week. Meanwhile, on the international scene, trade tensions have sharply escalated after President Trump declared a 30% tariff on imports from the EU and Mexico, taking effect on August 1. Nonetheless, the UK stands to remain unaffected during this tariff round due to its ongoing trade agreement with the US. This positions the UK as a potentially more attractive location for European exporters, who might seek to channel tariff-free access to the US market through Britain, encouraging new investment initiatives.