FX.co ★ UK Gilt Yields Edge Higher on Stronger GDP Data

The yield on the UK's 10-year gilt has risen to 4.37%, showing an attempt to recover from a low point reached earlier this year. This change comes in response to reduced expectations of interest rate cuts by the Bank of England, following unexpectedly strong GDP growth data. In November, the UK's GDP increased by 0.3%, rebounding from a 0.1% decline in October and exceeding the predicted 0.1% rise. Over the three months leading up to November, GDP saw a 0.1% growth, countering forecasts that predicted a 0.2% decrease. As a result, market expectations concerning monetary policy have slightly adjusted. Currently, traders anticipate approximately 46 basis points of rate cuts by the end of the year. There is an 84% likelihood of a second 25-basis-point reduction by December, and a first cut remains fully anticipated by June, with an 88% chance it will occur in April. Before the release of the GDP data, projections were just shy of 48 basis points of easing for the rest of the year, including 23 basis points by April.