FX.co ★ UK Gilt Yields Steady as BoE Rate Hike Bets Intensify

The yield on 10-year UK government bonds steadied near 5.2% after the previous session’s selloff, as investors weighed a light domestic data calendar against stronger-than-expected US inflation figures, which reinforced expectations of further Federal Reserve tightening. Brent crude prices also halted their recent slide amid renewed shipping tensions in the Strait of Hormuz. At the same time, expectations for additional Bank of England tightening have firmed, with markets increasingly pricing in another rate hike in December. Deputy Governor Clare Lombardelli cautioned that back-to-back increases remain possible, citing persistent wage pressures and the risk of second-round inflation effects. Investors are now largely anticipating another hike before year-end and a further increase by March, a prospect that could add fresh pressure on gilts. Attention is turning to the UK’s third-quarter GDP report due on Thursday.