Investing.com -- UK markets experienced a downturn as bond yields soared to their highest levels in over a decade due to ongoing worries about inflation, reminiscent of the 2022 gilt crisis. The 10-year benchmark yields saw an increase of up to 14 basis points, reaching 4.82%, a peak not seen since August 2008.
The pound experienced a decline against all major currencies, dropping over 1% in comparison to the dollar, while UK stocks also fell. This market behavior is causing traders to reassess their expectations for the Bank of England to lower interest rates this year.
These changes are occurring as markets consider the potential effects of proposed tariffs from the incoming US President Donald Trump on prices, which is causing a global increase in yields.
The market activities on Wednesday, which had no obvious driving factors, have been particularly unsettling for traders. This is due to the rise in UK rates happening concurrently with a decrease in the pound’s value. Generally, higher yields enhance a currency’s attractiveness, so a coordinated decrease indicates that investors are reevaluating the wider case for investing in the UK.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.