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Sterling Drops to Four-Week Low Against Dollar as UK Bond Yields Spike

03/09/2025 18:39

Key TakeawaysThe British pound (GBP) slipped to a four-week low against the U.S. dollar.The yield on 30-year UK gilts surged to 5.752%, the highest since 1998.Rising inflation pressures and reduced expectations of Bank of England rate cuts drove the move.Despite weak demand for ultra-long bonds globally, the UK’s 10-year gilt auction saw strong orders.Sterling Pressured as Long-Term Yields ClimbThe British pound weakened against the U.S. dollar, sliding to its lowest level in a month, as UK government bond yields jumped on Tuesday, according to Jinshi Data.Data from the London Stock Exchange showed that the yield on 30-year gilts rose to 5.752%, a level not seen since 1998.Analysts attribute the move to persistent inflationary pressures and fading expectations that the Bank of England (BoE) will cut interest rates soon.Francesco Pessole, FX strategist at ING, said that while demand for ultra-long bonds across developed markets has been weak, the UK’s 10-year gilt auction received robust orders, signaling selective investor appetite.Pessole added that sterling’s decline should not deepen significantly based on gilt yields alone, suggesting the currency may stabilize near current levels.

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