UK gilts nearly steady after BoE remains on hold; July construction PMI eyed

The United Kingdom’s gilts remained steady during European trading hours Thursday after the Bank of England (BoE) remained on hold at its monetary policy meeting, held today, keeping the Bank Rate stable at 0.75 percent; investors now shall turn their attention towards the country’s construction PMI for the month of July, scheduled to be released on August 2 by 08:30GMT for further direction in the debt market.

The yield on the benchmark 10-year gilts, traded tad higher 0.618 percent, the 30-year yield hovered around 1.315 percent and the yield on the short-term 2-year traded tad 1 basis point higher at 0.438 percent by 11:15GMT.

The central bank’s Monetary Policy Committee (MPC) has set monetary policy to meet the 2 percent inflation target, and in a way that helps to sustain growth and employment. At its meeting ending today, the MPC voted unanimously to maintain Bank Rate at 0.75 percent.

The Committee have also voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at GBP10 billion, besides, maintaining the stock of UK government bond purchases, financed by the issuance of central bank reserves, at GBP435 billion.

Assuming a smooth Brexit and some recovery in global growth, a significant margin of excess demand is likely to build in the medium term. Were that to occur, the Committee judges that increases in interest rates, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2 percent target.

Meanwhile, the FTSE 100 slipped tad -0.26 percent to 7,566.03 by 11:20GMT.