FX.co ★ UK 10-Year Gilt Yield Nears 2008 Peak

The yield on the UK’s 10-year gilt rose to 4.9%, nearing its highest closing level since 2008, as surging energy prices and hawkish signals from the Bank of England reignited expectations of three interest rate increases in 2026. Brent crude and European natural gas prices extended their multi-year highs, intensifying inflationary pressures on the UK economy. On Thursday, the BoE voted unanimously to keep rates at 3.75%, defying market expectations of a 7–2 split, and warned that the conflict in the Middle East could trigger further spikes in global energy and commodity prices. The central bank now expects a near-term rebound in CPI inflation, reversing the recent disinflation in domestic prices and wages. At the same time, UK public sector borrowing jumped to £14.3 billion in February 2026, up from £12.1 billion a year earlier and far above forecasts of £8.5 billion. This was the second-highest February borrowing figure on record, surpassed only by 2021.