UK 10-Year Gilt Yields Retreat on Weak GDP

2025-12-12 08:36 By Joana Ferreira 1 min. read

The UK 10-year gilt yield slipped below 4.5%, easing further from the three-week high of 4.57% reached on December 10, after UK GDP data came in weaker than expected.

The economy contracted by 0.1% in October, missing forecasts for 0.1% growth, reflecting a softer rebound in car manufacturing alongside contractions in both the services and construction sectors.

The back-to-back monthly declines have raised the risk of a quarterly contraction, prompting traders to increase their expectations for Bank of England rate cuts in 2026.

Markets still assign nearly a 90% probability to a 25 bp cut to 3.75%, while expectations for easing through the end of 2026 have risen to roughly 60 basis points, up about three basis points from yesterday’s close.

Elsewhere, the Federal Reserve delivered a widely anticipated 25 bp rate cut this month and indicated it still expects one additional cut next year.



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