FX.co ★ UK Gilt Yields Ease Ahead of BoE Decision

UK 10-year gilt yields retreated to around 5.3% as oil prices declined for a second consecutive session, while investors continued to digest yesterday’s Federal Reserve rate hike ahead of the Bank of England’s closely watched policy decision. Brent crude is trading near $105 a barrel after Saudi Arabia said it plans to restore roughly half the capacity of its damaged East–West pipeline within days. The outlook for the Middle East remains uncertain, however, keeping oil prices elevated and complicating the task for central banks as they seek to contain inflation without putting undue pressure on economic activity. The BoE is widely expected to leave interest rates on hold in what is likely to be a close call, but markets will be watching closely for any signals on the future policy path. In the US, the Fed raised rates by 25 basis points—the first increase since July 2023—and indicated that another hike is likely later this year amid persistent inflation pressures.