United Kingdom: Gilt Yields Ease Slightly but Stay Near 19-Year Highs.

The UK 10-year gilt yield dipped toward 5.35% on Friday as the energy price rally paused ahead of a key US CPI report, which could reinforce expectations of a Federal Reserve rate hike next week. Despite the slight easing, gilt yields remain near 19-year highs, on track for a weekly rise of over 20 basis points. Investors processed stronger-than-expected UK GDP data, with July’s month-on-month growth at 0.4%, beating forecasts. Services drove the expansion, while growth over the three months to July matched the previous period at 0.4%. Meanwhile, Brent crude stayed close to a four-month high, and UK natural gas prices remained near a 3.5-year high, amplifying concerns about renewed inflationary pressures. Markets are now fully pricing in four Bank of England rate hikes by the end of 2027, though Governor Bailey has emphasized that future decisions will hinge on economic and geopolitical developments.