FX.co ★ UK Gilt Yields Near 2008 High as Oil Surge Fuels Rate Hike Bets

UK 10-year gilt yields climbed toward 5.1%, nearing levels last seen in 2008, as surging oil prices—driven by the ongoing US blockade of Iran in the Strait of Hormuz—intensified inflation concerns and led investors to anticipate further central bank tightening. Brent crude reached new four-year highs amid reports of possible US military action against Iran. The Bank of England is expected to leave rates unchanged today, underscoring its caution over the Middle East crisis. Even so, markets are still pricing in nearly three quarter-point BoE rate increases in 2026. This comes on the heels of the Federal Reserve’s decision to hold rates steady, although the meeting revealed mounting internal divisions: four officials dissented, the largest number since October 1992, with three of them opposing the Fed’s signal of eventual rate cuts.