FX.co ★ UK Gilt Yields Steady as Middle East Tensions Ease

UK 10-year gilt yields were steady at 4.93%, just below two-week highs, after Iran and Israel agreed to scale back strikes following an appeal from US President Donald Trump. The conflict had previously pushed crude prices higher on Monday amid mounting fears that the ceasefire could unravel. The resulting rise in energy costs has intensified inflation concerns, prompting investors to fully price in at least a 25-basis-point rate hike by the Bank of England in September, with a strong probability of an additional increase. Meanwhile, dovish Monetary Policy Committee member Alan Taylor, who was part of the 8-1 majority voting to keep rates unchanged in April, said on Monday that current interest rates are “quite restrictive” and that he sees no need for further tightening to bring inflation under control.