FX.co ★ UK Gilt Yields Near 19-Year High Ahead of BoE Meeting

The UK 10-year gilt yield advanced toward 5.4%, approaching its highest level since August 2007, as surging oil prices and the UK’s exposure to energy shocks prompted investors to increase bets on further Bank of England rate hikes ahead of Thursday’s policy meeting. BoE Governor Andrew Bailey has pushed back against expectations of an imminent additional increase, but rising energy costs have blurred the inflation outlook, with oil trading well above $100 a barrel amid renewed hostilities in the Middle East. Goldman Sachs expects the BoE to leave Bank Rate unchanged at 3.75% on Thursday, before delivering a 25-basis-point hike in November as inflation remains elevated and growth proves resilient. Markets, however, are pricing in four BoE hikes by mid-2027. In the US, the Federal Reserve is expected to raise rates by 25 basis points on Wednesday, with persistent inflation concerns likely to keep attention on the prospects for further policy tightening.