FX.co ★ UK 10-Year Gilt Yields Sink Below 4.9%

UK 10-year gilt yields fell below 4.9%, their lowest level since April 21, after posting their sharpest weekly decline of 2024. The move came as investors welcomed progress in US–Iran talks and scaled back expectations for further Bank of England rate hikes in response to weaker economic data.

Brent crude slipped below $100 per barrel after US President Donald Trump said a memorandum of understanding between the two countries had been “largely negotiated” and would allow the reopening of the Strait of Hormuz.

On the data front, April retail sales sank 1.3%, nearly twice as much as economists had forecast, while inflation and labor market figures also undershot expectations. May PMI readings pointed to the first contraction in private-sector activity in a year, further reinforcing the shift in interest-rate expectations.

Investors are now looking ahead to speeches from BoE policymakers later this week for further monetary policy guidance, as well as to political developments around Prime Minister Keir Starmer following Labour’s regional election setbacks this month.