UK bond yields fall to lowest level since December 2024..
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| Let's start with the headline above that UK bond yields have quietly fallen to their lowest level in 14-months.
This is significant news as the bond market was arguably the key driver in 2025 and caused all sorts of problems for the Chancellor and the Pound. I can guarantee if bonds were as high as they were for much of last year right now, we would see GBP weaker by around 2% and Reeves out of a job.
But, the economy has started 2026 very well and provided the Chancellor with plenty of spare cash (fiscal headroom) and looks to now be £20 billion+ away from hitting her own debt rules heading into the very low-key Spring statement next month.
It's a shame the mainstream media aren't talking about this, but that's media for you as we all know.
Over to the Gorton & Denton by-election now and the reason why it's high stakes is two-fold; 1 - Labour won easily at the 2024 election (as they have done for many years now) with 80% of voters backing a 'left' party. If the Greens split the green vote, Reform could win or the Greens could establish themselves firmly as the 'left' party to choose. 2 - The PM is under pressure and that's what sells..
Onto forecasts and GBP v USD is currently performing 3% higher than the median for Q1 (amongst the credible data-houses that we follow). We still have 1-month left of course, but this puts the pair in good stead for what most believe will be a strong end to the year.
GBP v EUR is exactly where the median forecast had it for Q1 and probably where the pair should be trading with all things considered. |
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