FX.co ★ UK 10-Year Gilt Yields Stabilize

The UK 10-year gilt yield has stabilized at approximately 4.45% following a surge in early December, indicating that Chancellor Rachel Reeves' budget has helped ease some "doom-loop" pressures impacting government bonds. Investors are also positioning for the possibility of interest rate cuts in both the US and UK later this month. Analysts suggest that yields could increase by about a percentage point without hampering demand, while the budget's deflationary strategies might pave the way for further easing by the Bank of England. It is broadly anticipated that the BoE will lower rates by 25 basis points in December, although the decision is expected to be narrowly divided, with Governor Andrew Bailey likely casting the deciding vote amidst concerns from four hawkish members regarding ongoing inflation pressures. Meanwhile, in the US, the markets have fully priced in a third Federal Reserve rate cut set for Wednesday, with prospects of at least two more reductions by 2026.