UK Gilt Yields Rise as Oil Rebounds

UK 10-year gilt yields edged up to 4.97% on Tuesday, tracking a rebound in oil prices after Monday’s sharp selloff as uncertainty over the US-Iran conflict continued to support demand for risk-sensitive assets. Sentiment improved after US President Donald Trump called off planned strikes on Iran, signaling that a diplomatic solution remained possible, although Tehran denied any ongoing or planned negotiations. Domestically, last week’s Bank of England meeting reinforced the view that policymakers are in no rush to tighten monetary policy, leading investors to scale back expectations for interest rate hikes in 2026. The BoE voted 6-3 to leave rates unchanged, with three members supporting a hike, more than markets had anticipated. Still, Governor Andrew Bailey stressed that the disinflation process remains on track, while some policymakers suggested rate cuts could return to the agenda if tensions in the Middle East continue to ease.

