Created
: 2025.08.19
2025.08.19 17:25
Gilts had a poor session yesterday, underperforming Bunds by 5bp on the 10-year, ING's FX analyst Francesco Pesole notes.
"The yield on 30-year inflation-linked bonds reached its highest level since 1998 - surpassing the Liz Truss crisis. Some additional pressure on gilts may be coming from the UK's Debt Management Office announcing syndicated offerings in October and November, and/or some positioning ahead of Friday's UK sovereign rating review by Fitch."
"Either way, the pound followed bonds lower yesterday, and EUR/GBP has found some support. Tomorrow's CPI release (0700 BST) is a key event for sterling. We expect both headline and services inflation to accelerate, to 3.7% and 4.8%, respectively."
"That should consolidate markets' recent hawkish repricing in the Sonia curve. Bets on another cut by year-end briefly dropped below 50% yesterday - currently at 14bp. We see upside risks for the pound ahead of tomorrow's release and a break below 0.860 as increasingly possible."
Created
: 2025.08.19
Last updated
: 2025.08.19
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