UK 10-Year Gilt Yields Near 2008 Highs on Rate Hike Expectations

2026-05-04 09:15 By Joana Ferreira 1 min. read

UK 10-year gilt yields climbed above 5%, near their highest since 2008, as investors priced in potential Bank of England rate hikes to combat inflation.

The focus also remains on Britain’s municipal elections this Thursday, with polls indicating a possible setback for Prime Minister Keir Starmer’s Labour Party.

The rise in yields reflects ongoing global energy shocks, with oil prices at four-year highs and the Strait of Hormuz still closed due to the US-Israeli conflict with Iran.

Markets see a 50% chance of a BoE rate hike in June and expect two 25-basis-point increases by September.

However, uncertainty persists after the BoE kept rates unchanged, citing a broad range of economic impacts from the Iran war, from scenarios demanding aggressive rate rises to others requiring no action.

Governor Andrew Bailey called the decision a "difficult judgement call," cautioning that delaying action until inflationary pressures are clear could lead to a late response.



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