2026.07.1307:15:34UTC+00UK Gilt Yields Climb as Middle East Tensions Fuel Inflation Fears

UK 10-year gilt yields climbed to 4.91% as oil prices surged following a new wave of US strikes on Iran, amid escalating tensions over the status of the Strait of Hormuz. US Central Command said it had targeted dozens of locations to degrade Iran’s capacity to threaten regional shipping, while Iran declared the strait would remain closed “until further notice.” The resulting uncertainty has intensified inflation fears, prompting investors to anticipate additional Bank of England interest rate increases, with markets now pricing in at least one further hike this year and a significant likelihood of a second. Politically, Andy Burnham is poised to become the new Labour Party leader when the leadership contest concludes on Friday, July 17, and is expected to be formally appointed prime minister on Monday, July 20.