FX.co ★ UK Gilt Yields Ease Amid Falling Oil Prices

The yield on 10-year UK government bonds edged down to 5.15% on Monday, nearing its lowest level since early September, as declining oil prices helped ease inflation worries. Brent crude fell below $97 a barrel after US President Donald Trump indicated that further strikes on Iran were “highly unlikely,” provided there was substantial progress in nuclear talks and efforts to reopen the Strait of Hormuz.

Investors are now looking ahead to Thursday’s UK third-quarter GDP release, which is expected to show solid quarterly growth of 0.7%, underpinned by robust services activity. Even so, expectations of additional Bank of England interest rate increases are keeping gilt yields relatively elevated.

At the same time, focus is shifting to Tuesday’s US CPI report, which may provide fresh insight into the Federal Reserve’s policy outlook and the likely timing of future US rate hikes.