FX.co ★ UK Gilt Yields Edge Higher as Rate-Hike Bets Rise

The UK 10-year gilt yield rose to 5.2% as investors increasingly priced in additional Bank of England rate hikes over the coming months amid renewed inflation concerns. Brent crude approached $100 a barrel, while UK natural gas prices climbed to their highest level since late 2022, driven by renewed US-Iran conflict and reports that Iran and Oman were nearing an agreement to manage shipping through the Strait of Hormuz. Persistent inflationary pressures and resilient economic growth are keeping central banks under pressure to maintain a restrictive policy stance. Markets are fully pricing in a 25-basis-point BoE rate increase by December and a second hike by March 2027, according to LSEG data. Investors are also weighing the government’s commitment to fiscal discipline and to restoring the UK’s credibility in international bond markets ahead of the October 28 budget, as well as plans to boost regional growth by using public institutions to attract private investment.