FX.co ★ UK 10-Year Gilt Yield Near Four-Month High

The UK 10-year gilt yield has risen back to around 4.55%, hovering near the near four-month high of 4.59% reached earlier this week, as investors dial back expectations for further interest rate cuts from the Bank of England this year. Escalating geopolitical tensions linked to the conflict involving Iran have driven energy prices higher and reignited inflation worries, prompting markets to reassess the outlook for monetary easing. While oil prices have since pulled back from highs above $100 per barrel, the earlier spike has already been sufficient to substantially reshape rate expectations. Money markets are now assigning only a very small probability to any rate cuts this year, a marked shift from the period before the conflict, when investors had expected around two reductions. Market participants are also focusing on upcoming UK economic releases, in particular Friday’s monthly GDP figures.