UK 10-year gilt yields remained below 4.5%, their lowest level since January 22, as investors responded to weaker-than-expected economic data. ONS figures showed the economy expanded by just 0.1% in Q4 2025, missing forecasts of 0.2%. On an annual basis, GDP grew 1.0%, undershooting expectations and marking the slowest pace of growth since Q2 2024. Monthly data also pointed to unexpected contractions in both industrial production and construction.
The disappointing economic figures added to the mounting political pressure on Prime Minister Keir Starmer, who has faced calls to resign over his decision to appoint Peter Mandelson as ambassador to the US, despite Mandelson’s widely reported ties to the late convicted pedophile Jeffrey Epstein.
At the same time, markets continued to price in further monetary easing from the Bank of England. While policymakers left the benchmark rate unchanged at 3.75% in a split decision, their more dovish rhetoric signaled that inflation could start to move back toward the 2% target from April.
