UK Gilts Post Biggest Weekly Drop Since 2024 as Yields Slide

UK government bonds (gilts) experienced a relief rally, with yields recording their largest weekly decline since 2024. The move was supported by Finance Minister Rachel Reeves' commitment to fiscal rules and a pullback in expectations for interest rate hikes by the Bank of England (BoE). Investors turned to bonds amid renewed confidence that the government will maintain budget discipline, leading to a sharp drop in yields, particularly for long-dated bonds. Markets also found support from expectations that the BoE will adopt a less aggressive stance on interest rate policy. Analysts note that the rally may be temporary but has positively impacted market sentiment in the short term. The recovery in the bond market has also eased pressure on the pound, boosting investor risk appetite. This is not investment advice.