FX.co ★ UK 10-Year Gilt Yield Falls from 10-Week High After Soft CPI Data

The yield on the UK's 10-year government bonds, known as gilts, decreased to 4.7% from a recent 10-week high of 4.76% following surprising inflation data. The Consumer Price Index (CPI) recorded a 2.8% rise in February compared to the previous year, falling short of the anticipated 3%. Meanwhile, monthly inflation increased by 0.4%, still under expectations. This softer inflation data has fueled speculation of a possible interest rate cut, with traders now estimating a 70% probability that the Bank of England will reduce rates in May. However, uncertainty remains due to ongoing price pressures and the impact of former President Trump’s tariff policies. Attention will shift to Chancellor Rachel Reeves’ spring statement at 12:30 PM, which is expected to highlight measures on spending cuts and borrowing as she aims to regain fiscal flexibility. The Office for Budget Responsibility is predicted to lower UK growth projections, and the Debt Management Office is set to announce its largest bond issuance since the pandemic.