Gilt Yields Drop to Multi-Week Lows Ahead of BOE Decision as Oil Prices Fall Back

By Miriam Mukuru

Yields on U.K. government bonds, or gilts, dropped on Thursday due to falling oil prices, which eased inflation concerns even as the Bank of England was widely expected to raise interest rates in a decision at 1200 GMT.

Ten-year gilt yields fell to 5.101%, their lowest since August 28, while 30-year gilt yields fell to a four-month low of 5.554%, LSEG data showed.

Brent crude slipped below the $100 a barrel mark on Wednesday after Democrats gained control of the U.S. Senate and the House of Representatives in this week's midterm elections as markets priced in increased prospects of a possible resolution to the Middle East conflict.

"Markets look with more optimism on a diplomatic outcome to the conflict in the Middle East," MUFG analysts Edward Bell and Soojin Kim said in a note.

The fall in oil prices has eased inflation fears and caused investors to reduce their expectations of Bank of England interest-rate rises over the coming months.

Investors still expect the BOE to increase interest rates by a quarter point to 4.0% during Thursday's rate decision, but they have slightly cut back their expectations of future rate rises.

Markets priced in a total of 94 basis points of BOE rate rises by the end of 2027, 11 basis points lower than they priced at the start of this week, LSEG data show.

Some analysts said current market expectations of BOE rate hikes look excessive and that the central back could push back against the pricing at Thursday's rate decision.

"We expect the increase in [the BOE] rate to be accompanied by a message that the monetary policy committee doesn't see the need to follow up this initial hike immediately," RBC Capital Markets strategists said in a note.

Ten-year gilt yields last traded at 5.112%, down 4.6 basis points on the day.

Write to Miriam Mukuru at miriam.mukuru@wsj.com

(END) Dow Jones Newswires

November 05, 2026 05:21 ET (10:21 GMT)