FX.co ★ UK 10-Year Gilt Yield Falls after PMI Data

On Thursday, the yield on the UK's 10-year gilt decreased to 4.631%, following PMI data that fell short of expectations, thus increasing the likelihood of interest rate cuts by the Bank of England. The data revealed that both the composite and services PMIs did not meet forecasts, indicating a more pronounced slowdown in private sector growth. However, the manufacturing sector showed some relative improvement, as its contraction rate eased more than anticipated. Overall, the data paints a picture of a waning economy. Coupled with a softening labor market, this situation may influence the Bank of England to focus on stimulating growth rather than solely tackling inflation, despite an uptick in input price pressures. Attention now turns to forthcoming retail sales data, which is predicted to show recovery, bolstered by favorable weather conditions. Concurrently, global risk sentiment experienced a lift due to optimism surrounding a potential trade agreement between the US and the EU. Reports suggest both parties are negotiating towards implementing a 15% tariff on most imports, with the EU advocating for the inclusion of cars. President Trump has asserted that he will not reduce the rate below this threshold and indicated that some tariffs might increase to 50% by the August 1st deadline.