FX.co ★ UK Gilt Yields Steady Amid Cooling Inflation

The UK 10-year gilt yield remained around 4.55%, following new data that showed a continued decrease in inflation. This development comes as a relief to the Bank of England and the UK government and strengthens Finance Minister Rachel Reeves' standing ahead of the critical budget announcement next week. Inflation in October dropped to 3.6%, aligning with most predictions. This reduction was largely due to a decrease in household electricity and heating costs, attributed to changes in the Ofgem energy price cap, as well as lower hotel prices. Services inflation fell to 4.5%, a slightly bigger drop than anticipated, while core inflation decreased to 3.4%, as expected. In her upcoming tax and spending statement scheduled for 26 November, Reeves has committed to lowering living costs. She plans to introduce measures aimed at further reducing inflation, which may help pave the way for possible interest-rate cuts by the Bank of England.