UK Yields on The Rise
The yield on UK government paper is starting to turn higher again here. The 1OY Gilt is trading back up at 0.82 currently, moving back up towards the upper end of the .703 - .863 range which has framed price action over the last two months. With the UK COVID alert having been dropped and the country due for the next stage of reopening as of next Monday (May 17th), UK inflation expectations are rising. With this, there is room for yields to continue higher here and a break above the .863 level should see the market continuing up towards the next big resistance at .965.
Key Data on Watch
The BOE governor Andrew Bailey is due to speak later today (3.30pm UK) and traders will be closely watching his comments. The BOE has been adamant in maintaining its view that any spike in inflation will be temporary, and this is a view that Bailey is likely to reaffirm today. However, if the BOE governor is seen to be any more concerned about upside risks in the economic outlook, especially given the success with vaccines and the lockdown easing, this could help light a fire under yields.
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