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2026.05.2708:25:29UTC+00UK 10-Year Gilt Yields Fall on US-Iran Peace Hopes

UK 10-year gilt yields fell below 4.85%, their lowest level since April 20, as optimism builds over a potential US–Iran peace agreement. Investors are closely tracking developments in the Middle East, encouraged by the recent lack of negative rhetoric from either side and sustained hopes that a deal to ease tensions and reopen the Strait of Hormuz remains possible despite recent strikes. In response, traders have pared back expectations for further Bank of England tightening and now price in around 40 basis points of additional rate hikes by year-end, with roughly even odds of an increase at the next meeting. Market focus is turning to upcoming speeches by BoE policymakers for fresh monetary policy signals, as well as to the political outlook for Prime Minister Keir Starmer following Labour’s setbacks in recent regional elections.

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