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2026.07.2907:47:46UTC+00UK Gilt Yields Rise on Oil-Driven Inflation Concerns

The UK 10-year gilt yield rose to 4.97% on Wednesday, rebounding from two-week lows as renewed military clashes between the US and Iran pushed oil prices higher and reignited inflation worries. Caution also prevailed ahead of the US Federal Reserve’s policy decision later in the day and the Bank of England’s meeting on Thursday, both seen as key to clarifying the interest rate outlook. Markets broadly expect the Fed to leave rates unchanged, though they still price in roughly a 30% probability of a 25-basis-point increase. In the UK, the Bank of England is likewise expected to hold its Bank Rate at 3.75%, with investors scrutinizing the voting split for signals on the future policy stance. Recent data showed UK inflation easing to a 15-month low of 2.6% in June, undershooting the BoE’s forecast. Even so, businesses and government officials have cautioned that the latest surge in energy prices could push inflation higher again in the coming months.

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