FX.co ★ UK Gilt Yields Edge Higher

UK 10-year gilt yields inched up to 5.4%, mirroring moves in core European bond markets as political unrest in France intensified worries over that country’s fiscal trajectory. Demonstrations in several French cities have escalated into violent clashes and looting, increasing the pressure on President Emmanuel Macron’s administration in the run-up to the 2027 presidential election.

At the same time, some large investors are positioning for the possibility that next week’s UK budget will underscore fiscal discipline, potentially bolstering demand for gilts. M&G, Ninety One, Mediolanum and Raymond James Wealth Management have been adding to their holdings of UK government bonds ahead of the 28 October statement, betting that yields could fall if Chancellor John Healey convinces markets that public spending and borrowing will remain under control.

Since Andy Burnham became prime minister, UK gilt yields have risen by less than those in many other major sovereign markets, most notably France, where political turbulence has amplified fiscal concerns. Against this backdrop, gilts have shown relative resilience.