29.04.202608:27:40UTC+00UK Gilt Yields Hit 2008 Highs

UK 10-year gilt yields rose above 5%, nearing levels last seen in 2008, as investors digested revised UK economic forecasts and awaited policy decisions from the Federal Reserve and the Bank of England, alongside developments in US-Iran negotiations. Lloyds increased its UK inflation forecast for 2026 to 3.4% from 2.6% and lowered its GDP growth projection to 0.5% from 1.2%. The bank no longer anticipates any Bank of England rate cuts this year, having previously expected two, and now forecasts unemployment to peak at 5.6% in Q4, up from 5.3%. On the policy front, both the Fed and the BoE are expected to leave interest rates unchanged this week, reflecting increased caution amid the Middle East crisis. Nonetheless, markets continue to price in two 25-basis-point Bank of England rate hikes in 2026. Adding to the upward pressure on yields, oil prices climbed to four-year highs during the US-Iran standoff, following reports that US President Trump ordered preparations for a prolonged naval blockade of the Strait of Hormuz to intensify economic pressure on Iran.