GBP falls 0.25% against USD as 10-year UK gilt yields hit 4.82%, the lowest level in over a month amid BoE rate hike doubts.
The British Pound (GBP) declined 0.25% to 1.3470 against the US Dollar (USD) in European trading on Tuesday, pressured by a sharp drop in UK gilt yields. The 10-year gilt yield fell to 4.82%, its lowest level in over a month, as traders scaled back expectations for a near-term Bank of England (BoE) interest rate hike.
Yields recovered slightly to 4.86% but remained down 1% on the day. Weak UK economic data, including a rise in the ILO Unemployment Rate to 5%, has fueled skepticism about further monetary tightening despite elevated oil prices. The pound underperformed against most major currencies, particularly the Canadian Dollar.
The shift in rate expectations follows last week’s labor market report from the UK Office for National Statistics, which highlighted rising unemployment and softer wage growth, easing pressure on the BoE to act aggressively.