FX.co ★ UK Gilt Yield Hits 19-Year High as BoE Hike Bets Surge

The UK 10-year gilt yield climbed above 5.3%, its highest level since August 2007, as expectations of further Bank of England rate hikes strengthened amid persistent inflation concerns. Rising energy costs, coupled with the ECB’s latest rate increase and a more hawkish inflation outlook, added further upward pressure on UK yields. Brent crude rose above $100 a barrel, while UK natural gas prices hit their highest level since late 2022, as escalating tensions in the Middle East heightened worries over energy supplies. Markets are now fully pricing in four BoE rate hikes by the end of 2027, even as Governor Andrew Bailey has cautioned that another increase is not a foregone conclusion, emphasizing that future policy decisions will depend on evolving economic and geopolitical conditions. In the Eurozone, the ECB delivered the widely anticipated rate hike, raised its inflation projections for the next two years, and warned that inflation could remain above its 2% target for an “extended period.”