UK Gilt Yields Rebound as US-Iran Tensions Lift Oil Prices

2026-06-01 09:31 By Joana Ferreira 1 min. read

UK 10-year gilt yields rose to 4.85% at the start of June, rebounding from over one-month lows at the end of May, as oil prices surged amid escalating US-Iran tensions.

Both nations continued exchanging strikes, with Iran claiming it targeted a US airbase previously used in an attack on a telecommunications tower on Sirik Island, while both sides cited "self-defense." Over the weekend, they exchanged proposals to revise a draft deal aimed at extending the ceasefire and reopening the Strait of Hormuz, though progress remained uncertain.

The geopolitical uncertainty has led investors to modestly increase expectations for further Bank of England rate hikes this year.

Economically, UK house prices fell 0.6% in May, according to Nationwide, a sharper decline than the expected 0.1% and the largest monthly drop since June 2025, driven by weakening consumer confidence and the Iran conflict’s impact on energy prices.



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