UK 10-Year Gilt Yields Fall on US-Iran Peace Hopes

2026-05-27 08:25 By Joana Ferreira 1 min. read

UK 10-year gilt yields fell below 4.85%, their lowest level since April 20, as optimism grows over a potential US-Iran peace deal.

Investors are closely monitoring Middle East developments, encouraged by the recent absence of negative signals from both sides and persistent hopes that an agreement to ease tensions and reopen the Strait of Hormuz could still be reached despite recent strikes.

Traders have trimmed their bets on Bank of England rate hikes, now expecting about 40 basis points of tightening by year-end, with a roughly 50% chance of a hike next month.

Market attention is now focused on upcoming speeches from BoE policymakers for monetary policy signals, as well as political developments surrounding Prime Minister Keir Starmer following Labour’s regional election setbacks.



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UK 10-Year Gilt Yields Fall on US-Iran Peace Hopes
UK 10-year gilt yields fell below 4.85%, their lowest level since April 20, as optimism grows over a potential US-Iran peace deal. Investors are closely monitoring Middle East developments, encouraged by the recent absence of negative signals from both sides and persistent hopes that an agreement to ease tensions and reopen the Strait of Hormuz could still be reached despite recent strikes. Traders have trimmed their bets on Bank of England rate hikes, now expecting about 40 basis points of tightening by year-end, with a roughly 50% chance of a hike next month. Market attention is now focused on upcoming speeches from BoE policymakers for monetary policy signals, as well as political developments surrounding Prime Minister Keir Starmer following Labour’s regional election setbacks.
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UK 10-year gilt yields fell to 4.85%, their lowest level since April 20, outperforming European peers as markets reopened after the Bank Holiday weekend and processed fresh Middle East developments. Iran reported explosions in the southern port city of Bandar Abbas, while Washington confirmed it conducted "self-defense" strikes targeting Iranian missile launch sites and vessels attempting to deploy naval mines. This followed US President Donald Trump's statement that a memorandum of understanding between the two nations had been "largely negotiated." Meanwhile, recent data revealed contractions in UK private sector activity during May, alongside cooling inflation and a softer labor market, prompting investors to scale back Bank of England rate hike expectations. Market focus now shifts to upcoming speeches from BoE policymakers for monetary policy signals, as well as political developments surrounding Prime Minister Keir Starmer following Labour’s regional election setbacks this month.
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