FX.co ★ UK 10-Year Gilt Yield Dips

The yield on the UK's 10-year gilt dropped to 4.4% as worries about a potential trade conflict between the US and Europe subsided. This comes in light of stronger-than-anticipated public borrowing figures. US President Donald Trump announced that he would delay implementing tariffs on goods from European nations opposing his initiative to gain control of Greenland. He mentioned that a "framework for a future deal" had been established after discussions with NATO, though specifics remain undefined. Domestically, the UK public sector budget deficit reduced to £11.6 billion in December, which was better than the anticipated £13 billion. Earlier in the week, data from the Office for National Statistics indicated that headline CPI inflation rose to 3.4%, slightly surpassing the 3.3% forecast. Services inflation, an important measure of domestic price pressures scrutinized by the Bank of England, increased marginally to 4.5% from 4.4%, which was less than expected. Meanwhile, the unemployment rate stayed at a pandemic-high of 5.1%, with wage growth decelerating to 4.5%, marking its slowest growth since April 2022.