Daily Basis — UK Rates & Gilt Yields

The Bank of England held the base rate at 3.75% at June's MPC meeting, though the narrow four-to-five split signals a live decision at August's gathering. UK gilt markets staged a modest rally over the session, with the 10-year benchmark easing 3 basis points to 4.45% as the latest CPI print — 2.8% year-on-year — gave the dovish minority modest ammunition but fell short of the consistent disinflation trajectory the Committee majority requires before easing further. The 2s–10s gilt curve has normalised to a +64 basis point slope, its most positive reading since early 2022, reflecting markets pricing in a gradual but sustained cutting cycle through 2027. Swap markets imply 1.5 cuts by December 2026, with an August 25bp reduction at 58% probability; a stronger-than-expected jobs report on 15 July or an upside services CPI surprise would sharply reduce those odds.