The yield on the UK 10-year government bond declined by 6 basis points to settle at 4.574% during Wednesday’s trading session, marking its lowest level in three weeks. This downward movement reflects shifting market expectations about the Bank of England’s monetary policy path, with investors increasingly pricing in potential rate cuts later this year amid softening economic indicators.
The bond market movement coincided with weaker-than-expected UK services PMI data and a broader rally in European sovereign debt. Analysts note the yield drop suggests traders are scaling back bets on additional tightening from the BOE, particularly after recent comments from policymakers hinted at a more cautious approach to further rate hikes.
Market participants will closely monitor Friday’s UK GDP figures for additional clues about the economic outlook. The 10-year gilt yield has now retreated nearly 20 basis points from its recent peak above 4.75% in late May, though remains elevated compared to levels seen earlier this year.
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