2026.07.0708:48:48UTC+00UK Gilt Yields Surge on Oil Spike, Rate Hike Bets

UK 10-year gilt yields rose above 4.8%, their highest level since June 19, as crude oil prices climbed following attacks on vessels in the Strait of Hormuz. The renewed tension in this key shipping route pushed crude back above $72 per barrel—its strongest level since early July—adding to inflationary pressures. At the same time, traders are ramping up expectations for further Bank of England tightening, now pricing in a 76% probability of a rate increase by year-end and better than 50% odds of a hike in November. Governor Andrew Bailey recently reiterated that inflation is still expected to return to the 2% target, albeit later than previously forecast, and he played down the prospect of near-term rate cuts. On the political front, Andy Burnham, the frontrunner to succeed Keir Starmer as prime minister, has yet to name a finance minister, with former energy minister Ed Miliband seen as the leading contender.