FX.co ★ UK Gilt Yields Near 18-Year High on Inflation Fears

The yield on the UK’s 10-year gilt climbed toward 4.85%, approaching its highest level in 18 years, as conflicting signals from the US and Iran intensified market uncertainty. President Trump stated that Iran is seeking a deal “but is afraid to admit it,” while Iranian state media rejected the prospect of talks and instead pressed for its own guarantees, including the possibility of levying fees on vessels transiting the Strait of Hormuz. Oil prices jumped, with Brent crude nearing $105 per barrel and on course for its largest monthly gain since 1990.

On the data front, consumer confidence, as measured by the British Retail Consortium, slumped in March amid growing concerns that the conflict could entrench inflationary pressures. Markets are now pricing in three Bank of England rate increases, assigning a 70% probability to a hike next month and fully expecting a second move by July.