FX.co ★ UK 10-Year Gilt Yield Edges Up

The yield on the UK's 10-year government bonds, known as gilts, increased to 4.74% as global trade tension relief reduced the appeal of these safe-haven investments. This rise was influenced by a U.S. court decision declaring President Trump's extensive tariffs to be unlawful. This ruling, although currently under appeal, temporarily halts tariffs on key trading partners, enhancing hopes for global trade stabilization and boosting investors' willingness to take risks. In the United Kingdom, confidence was further bolstered by the International Monetary Fund's upgrade of the country's 2025 growth forecast to 1.2%. Nevertheless, the IMF advised Chancellor Rachel Reeves to exercise fiscal caution ahead of the anticipated June Spending Review. On the inflationary front, the issue remains persistent. The inflation rate for groceries soared to 4.1% in May, marking the highest level in over a year, which has made consumers wary and tempered expectations for significant interest rate reductions by the Bank of England. Market predictions now suggest fewer than two quarter-point interest rate cuts by the BoE before the year concludes.