FX.co ★ UK 10-Year Gilt Yield Holds Decline

The UK 10-year gilt yield hovered near 4.90%, down more than 10 basis points for the week, as easing energy prices tempered expectations of further monetary tightening. Sentiment improved after Iran announced an agreement with Oman on a proposed shipping route through the Strait of Hormuz, bolstering hopes that energy flows through this critical waterway could resume.

Still, the outlook for a broader US–Iran agreement remains uncertain, with President Donald Trump stating he would “see what happens” in ongoing negotiations. Softer oil prices have alleviated concerns about inflation and slowing economic growth, reinforcing expectations that the Bank of England will stick to a gradual pace of policy tightening.

That view was underpinned by last week’s Bank of England meeting, where Governor Andrew Bailey played down the likelihood of additional rate hikes, maintaining that the disinflation process remains on course despite persistent geopolitical risks.