UK gilts rebound following weakness in the crude oil prices, investors shrug-off firmer construction PMI

The UK gilts rebounded Friday, following weakness in crude oil prices. Also, investors did not react to the higher construction PMI data, which accounts for around 5.9 percent of the country’s GDP.

We continue to foresee that the 10-year gilt yields will increase towards 1.50 percent multi-day and then 1.60 percent.

The yield on the benchmark 10-year gilts, which moves inversely to its price, fell 4 basis points to 1.45 percent, the super-long 40-year bond yield dipped 3 basis points to 1.89 percent and the yield on short-term 2-year slid 4 basis points to 0.12 percent by 10:50 GMT.

Crude oil prices fell more than 1 percent as investor booked profit after a long rally post-OPEC deal. The International benchmark Brent futures fell 1.09 percent to $53.35 and West Texas Intermediate (WTI) dipped 0.80 percent to $50.65 by 04:30 GMT.

UK’s November construction PMI hardens to 52.8, hitting highest since March this year, from 52.6 in October, but as it contrasts with the market consensus expectation of a dip to 52.2, should, in theory, be interpreted as slightly GBP-positive. It still remains below its long range average of 54.2, though, but the latest 3 months trend is on an improving path.

Meanwhile, the FTSE 100 traded 0.91 percent lower to 6,691 by 10:50 GMT. While at 10:00 GMT, the FxWirePro's Hourly GBP Strength Index stood neutral at +47.48 (higher than +75 represents purely bullish trend).