FX.co ★ UK Gilt Yields Retreat Ahead of BOE Meeting

The yield on the UK’s 10-year gilt slipped toward 4.65%, pulling back from last week’s six-month high of 4.78%, as mounting tensions in the Middle East complicated the Bank of England’s policy outlook ahead of its upcoming meeting. US President Donald Trump signaled that military operations in Iran would extend beyond this week, while Israeli officials warned on Monday that the conflict could drag on for “several more long weeks.” The resulting surge in energy prices has driven traders to assign nearly a 50% probability to a Bank of England rate hike in November—a sharp reversal from early March, when markets were still pricing in two cuts for the year. At this week’s meeting, analysts will focus closely on the division of votes among policymakers, with a 7–2 or 6–3 decision to keep rates unchanged viewed as the most likely outcome.