FX.co ★ UK 10-Year Gilt Yield Jumps Amid Middle East Tensions

The UK 10-year gilt yield climbed to 4.4%, its highest level since February 13, as rising tensions in the Middle East unsettled global markets and prompted traders to pare back expectations of imminent interest rate cuts by major central banks amid renewed inflation worries. Natural gas and crude oil prices spiked following the formal closure of the Strait of Hormuz and the continued halt in Qatari LNG exports, intensifying the risk of persistent energy-driven inflation and likely nudging the Bank of England toward a more hawkish policy stance to rein in price pressures. Domestic political uncertainty further weighed on sentiment. Labour’s unexpected defeat in Gorton and Denton has intensified speculation over the futures of Prime Minister Keir Starmer and Chancellor Rachel Reeves, stoking concerns that a shift in leadership toward figures favouring higher fiscal spending could place additional strain on the UK’s public finances.