UK gilts plunge on rise in December services PMI; BoE member Haldane’s speech in focus

The UK gilts plunged Thursday after the country’s services PMI for the month of December came in better than what markets had initially anticipated. Also, investors are looking forward to Bank of England’s (BoE) member Haldane’s speech, scheduled to be held on January 5 by 19:30GMT.

The yield on the benchmark 10-year gilts, jumped 3 basis points to 1.25 percent, the super-long 30-year bond yields surged 2-1/2 basis points to 1.79 percent and the yield on the short-term 2-year traded 3-1/2 basis points higher at 0.50 percent by 09:50GMT.

The seasonally adjusted IHS Markit/CIPS UK Services PMI Business Activity Index registered 54.2 in December, up from 53.8 in the previous month, to signal the second-fastest upturn in service sector output since April 2017.

Higher levels of business activity have now been recorded for seventeen months running, supported by the resilient economic backdrop and rising consumer spending. However, service providers noted that Brexit-related uncertainty continued to hold back clients’ willingness to spend at the end of 2017.

"The likelihood is that the resilience of the economy will be increasingly tested by the prevailing uncertainty and anxiety about the future as we move into 2018, suggesting growth will slow in the absence of greater clarity and reassurance regarding a favorable Brexit outcome," said Chris Williamson, Chief Business Economist at IHS Markit.

Meanwhile, the FTSE 100 traded 0.20 percent higher at 7,685.75 by 09:50 GMT, while at 09:00GMT, the FxWirePro's Hourly Pound Strength Index remained slightly bullish at 108.3 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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