The UK 10-year gilt yield eased to 4.5% but remained near one-month highs reached earlier in the week as traders assessed key economic data ahead of the Bank of England's monetary policy decision on Thursday.
UK 10-year Gilt yield retreats slightly
The annual inflation rate in the UK rose for the second consecutive month to 2.6% in November, aligning with expectations. Services inflation held steady at 5%, slightly below forecasts of 5.1% but exceeding the BoE’s estimate of 4.9%. Earlier in the week, UK wage growth came in stronger than anticipated.
Focus on BoE
The Bank of England is widely expected to keep its benchmark interest rate unchanged while maintaining a cautious stance toward future rate cuts. Markets are pricing in two quarter-point rate cuts by the end of 2025, with a roughly 40% chance of a third reduction.
