UK gilts gain ahead of 10-year auction, BoE monetary policy decision

The UK gilts gained Monday ahead of the 10-year auction, scheduled to be held on March 14. Also, investors remain focussed on the Bank of England’s (BoE) monetary policy meeting, to be held on March 16 and the unemployment rate for the month of January a day prior for further direction in the debt market.

The yield on the benchmark 10-year gilts, which moves inversely to its price, slumped 2 basis points to 1.20 percent, the super-long 30-year bond yields also plunged 2 basis points to 1.81 percent and the yield on the short-term 2-year traded 2-1/2 basis points lower at 0.07 percent by 09:20 GMT.

The BoE is expected to maintain its neutral policy stance at the monetary policy meeting, scheduled to be held on March 16. Further, the central bank is also expected to hold its Bank Rate at 0.25 percent while leaving the targets for the stock of government bond purchases (APF) and the stock of corporate bond purchases (CBPS) unchanged at GBP435bn and GBP10bn, respectively.

"In our view, the BoE seems to be more worried about slower growth than too-high inflation if this is only temporary. EUR/GBP has reached our 1-3M target of 0.87 and we are currently reviewing our forecast. We still see risks skewed to the upside for EUR/GBP in the coming months ahead of and after the triggering of Article 50," Danske Bank commented in its recent research report.

Meanwhile, the FTSE 100 rose 0.06 percent to 7,347.30 by 09:40 GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at 28.79 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex