FX.co ★ UK 10-Year Gilt Yield Falls from 6-Week High

UK 10-year gilt yields have eased to approximately 4.51%, a slight decrease from the six-week peak of 4.539% observed last week, as government bonds mirrored gains in US Treasuries. The dip in oil prices has mitigated inflation concerns, prompting investors to tentatively increase their expectations for future monetary easing by the Bank of England (BoE). Current market projections envisage only one additional rate cut in 2026, anticipated in the year's first half. Last December, the BoE reduced interest rates by 25 basis points, bringing them down to 3.75%, in a closely split 5–4 decision, underscoring persistent inflation concerns among policymakers. Although headline inflation dropped to 3.2% in November, it remains significantly above the 2% target, with Governor Andrew Bailey indicating that any subsequent cuts will likely be gradual. Recent economic data has indicated a decline in mortgage demand, contrasted by a marked increase in consumer borrowing.