UK Gilt Yields Hold Above 5% as Inflation Risks Persist

2026-08-24 08:13 By Joana Ferreira 1 min. read

UK 10-year gilt yields remained above the 5% threshold as investors weighed persistent inflationary pressures stemming from oil prices above $90 per barrel, potential fuel supply disruptions, low Eurozone gas inventories, and the prospect of a prolonged Iran conflict.

Markets awaited details on Iran sanctions from US Treasury Secretary Scott Bessent later today, while Fed Chair Kevin Warsh’s Jackson Hole remarks on Friday could offer clues on the interest-rate outlook.

In the UK, money markets continue to price in one Bank of England rate hike by year-end, with another 25-basis-point increase expected by early 2027.

Inflation rose to 2.9% in July, its highest since March, while core inflation reached 2.6%.

Meanwhile, stronger PMI readings and consumer confidence at a two-year high provided an early boost for new Prime Minister Andy Burnham, though the UK remains vulnerable to renewed inflationary pressure from the Iran conflict.



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UK Gilt Yields Hold Above 5% as Inflation Risks Persist
UK 10-year gilt yields remained above the 5% threshold as investors weighed persistent inflationary pressures stemming from oil prices above $90 per barrel, potential fuel supply disruptions, low Eurozone gas inventories, and the prospect of a prolonged Iran conflict. Markets awaited details on Iran sanctions from US Treasury Secretary Scott Bessent later today, while Fed Chair Kevin Warsh’s Jackson Hole remarks on Friday could offer clues on the interest-rate outlook. In the UK, money markets continue to price in one Bank of England rate hike by year-end, with another 25-basis-point increase expected by early 2027. Inflation rose to 2.9% in July, its highest since March, while core inflation reached 2.6%. Meanwhile, stronger PMI readings and consumer confidence at a two-year high provided an early boost for new Prime Minister Andy Burnham, though the UK remains vulnerable to renewed inflationary pressure from the Iran conflict.
2026-08-24
UK 10-Year Gilt Yield Moves Higher
The UK 10-year gilt yield rose to around 5.06% as higher oil prices reinforced concerns about inflation and the outlook for monetary policy. The increase in energy costs is particularly significant for the UK, a net oil importer that has struggled to bring inflation sustainably back to target. Consumer price inflation accelerated to a four-month high in July, although recent labour-market data pointed to some cooling in employment conditions. Markets continue to anticipate tighter monetary policy, with traders pricing in one Bank of England rate increase by the end of this year and another quarter-point hike by April next year. Rising gilt yields also reflected broader pressure across global bond markets, following a similar move in US Treasuries as the initial boost from the US Treasury’s expanded buyback programme faded.
2026-08-20
UK 10-Year Gilt Yield Edges Down After Inflation Data
The UK 10-year gilt yield eased to around 5.05% as investors assessed the latest inflation and labour-market data for clues on the Bank of England’s policy outlook. Headline CPI rose to 2.9% year-on-year in July from 2.6% in June, matching market expectations, while core inflation remained unchanged at 2.6%. The figures were broadly in line with forecasts and prompted traders to modestly reduce bets on a rate increase before year-end. Recent labour data also pointed to a cooling jobs market, with unemployment unexpectedly holding at 4.9% and payroll employment declining by 86,000 year-on-year. Regular earnings growth was slightly stronger than anticipated at 3.5%. While the UK economy has shown some resilience, elevated oil prices and fading hopes of a US-Iran agreement continue to pose inflation risks. Markets still price at least one BoE hike this year, although most economists expect rates to remain unchanged.
2026-08-19