FX.co ★ UK Gilt Yields Rise on Inflation Fears

UK 10-year gilt yields climbed toward 4.95%, their highest level since May 21, as inflation concerns deepened amid rising tensions in the Middle East. The US and Iran exchanged new strikes, with President Donald Trump warning that Iran is taking "too long" to negotiate a peace agreement and will now "pay the price." Iranian Parliament Speaker Mohammad Bagher Ghalibaf stated on Wednesday that Tehran would respond "decisively and without delay" to any aggression.

The surge in energy prices stemming from the conflict has amplified inflation worries, leading investors to price in at least a 25-basis-point rate increase by the Bank of England in September, with a significant probability of a second hike. However, dovish Monetary Policy Committee member Alan Taylor, who supported the 8–1 vote to keep rates on hold in April, said on Monday that current interest rates are "quite restrictive" and that he sees no need for additional tightening to contain inflation.