FX.co ★ UK Gilt Yields Steady Amid Weak Data and Pre-Budget Uncertainty

The yield on the UK's 10-year gilt remained steady at 4.4%, marking its lowest point since December 2024. This stability comes as disappointing economic data has led to speculation about a possible Bank of England rate cut in the upcoming month. Additionally, it has intensified the scrutiny on Treasury Chief Rachel Reeves as she prepares for the budget announcement on November 26. The UK's economic growth showed a mere 0.1% increase quarter-on-quarter during the third quarter, compared to a 0.3% rise in the second quarter and below the projected 0.2%. In September, the GDP dipped by 0.1% month-on-month, contrasting with the anticipated 0.1% growth. Previous data also indicated the unemployment rate surged to a four-year high, while wage growth has slowed to its lowest since early 2022. Concurrently, an unsuccessful bid to contest Prime Minister Keir Starmer's leadership unsettled investors. Allies have cautioned that any leadership challenges might induce market instability and drive gilt yields higher, particularly with the budget looming just two weeks away. In a separate development, investors reacted positively to the resolution of a prolonged US government shutdown.