The UK 10-year gilt yield held steady at 4.551% after May inflation came in at 3.4%, still well above the Bank of England’s 2% target. The data did little to shift market expectations, with traders still pricing in around 48 basis points of rate cuts for the rest of 2025, roughly two quarter-point reductions. Markets continue to see no chance of a rate cut at the BOE’s Thursday meeting. The stubborn inflation figures reinforce the view that monetary policy will remain tight in the near term. Meanwhile, global investor sentiment remains cautious due to escalating tensions between Israel and Iran.
