FX.co ★ UK Gilt Yields Near May Peak on Inflation Fears

UK 10-year gilt yields rose to 4.94%, nearing their highest level since 21 May, as renewed hostilities in the Middle East heightened fears of a prolonged conflict involving Iran and drove oil prices higher, intensifying inflation concerns. Brent crude jumped more than 4% after Iran and Israel exchanged missile strikes, despite President Trump urging both sides to halt hostilities and enter peace negotiations.

Market expectations also shifted, with traders now fully pricing in two Bank of England rate increases this year. However, Monetary Policy Committee member Alan Taylor, who joined the 8–1 majority in April to keep rates on hold, struck a more dovish tone. He described current interest rates as “quite restrictive” and said he saw no need for additional tightening to contain inflationary pressures.

On the data front, permanent staff appointments in May fell at the steepest pace in 10 months, according to REC/KPMG figures, as firms cited weak confidence and rising costs.