UK gilts slump ahead of October manufacturing PMI, BoE’s monetary policy decision

The United Kingdom’s gilts slumped during Wednesday’s afternoon session ahead of the Bank of England’s (BoE) monetary policy decision, scheduled to be unveiled on November 1 by 12:00GMT, followed by Governor Mark Carney’s speech, by 12:30GMT for further direction in the debt market.

Also, Britain’s manufacturing PMI for the month of October, due on November 1 will be closely eyed for better insight into the market.

The yield on the benchmark 10-year gilts, jumped 2-1/2 basis points to 1.423 percent, the super-long 30-year bond yields surged nearly 2-1/2 basis points to 1.842 percent and the yield on the short-term 2-year traded 2 basis points higher at 0.739 percent by 10:50GMT.

Following a downbeat retail survey yesterday, today’s UK household and business sentiment indicators reinforced the impression of weakness at the start of the fourth quarter. In particular, the GfK consumer confidence survey aligned with expectations with the headline index down 1pt in October to -10, the bottom of this year’s range.

While this indicator has edged lower this month in each of the past eight years, today’s survey highlighted that, against the backdrop of ongoing Brexit uncertainties, households have become more downbeat about the economic outlook over the coming twelve months. And so, perhaps unsurprisingly, they assessed the current climate to be less favourable for major purchases than recent months, Daiwa Capital Markets reported.

With major Brexit uncertainty persisting less than five months to go before the UK is supposed to leave the EU, there certainly seems little cause for business optimism.

Meanwhile, the FTSE 100 rose 1.50 percent to 7,144.05 by 11:20GMT, while at 11:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -17.77 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex