18.02.202608:24:09UTC+00UK 10-Year Gilt Yields Hit Fresh One-Month Low

UK 10-year gilt yields declined to 4.37%, their lowest level since 14 January, as investors digested fresh inflation data and reassessed the outlook for Bank of England policy. Figures from the Office for National Statistics showed annual inflation easing to 3.0% in January, the slowest pace since March 2025, largely reflecting weaker increases in transport and food prices. Core inflation also slipped to 3.1%, its lowest reading since August 2021. The release followed a softer-than-expected labour market report: average weekly earnings including bonuses rose 4.2% in the three months to December, the slowest growth since the period to August 2024 and below forecasts, while the unemployment rate rose to 5.2%, its highest since early 2021. In turn, traders increased their bets on monetary easing, fully pricing in a 25-basis-point rate cut by April and assigning better than a 75% probability to a move as early as March. Two rate cuts are now fully priced in by November.