FX.co ★ UK 10-Year Gilt Yield Edges Down Tuesday

The yield on the UK's 10-year gilt has dropped below 4.6% amid growing expectations for the Bank of England to reduce interest rates. This anticipation stems from the potential economic slowdown resulting from President Trump’s intensifying trade war. In reaction to the new US tariffs, traders now unanimously expect a BoE rate cut to occur in May, a significant increase from the previous 50% likelihood. Additionally, market projections include three rate cuts by the end of 2025. Despite the prevailing global trade tensions, the UK might show greater resilience compared to other economies. Certain UK businesses stand to gain if US companies opt to switch suppliers to sidestep higher tariffs, given that the UK's 10% levy is relatively modest in contrast to other US trade measures. The UK government predicts that the direct impact of these tariffs on GDP will be less than 0.1%.