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Pound falls and gilt yields see-saw on interest rate cut hints and the turmoil in No.10 - THIS IS MONEY
The pound fell sharply and gilt yields see-sawed wildly yesterday as interest rate expectations and political turmoil gripped the City.
Currency traders sold off sterling as the Bank of England – led by Governor Andrew Bailey – left interest rates on hold but opened the door to a cut within weeks.
And fears that Prime Minister Keir Starmer could be kicked out to be replaced by a Labour Left-winger – as the fallout from the Jeffrey Epstein scandal threatens to overwhelm Downing Street – also took their toll.
The pound slumped by a cent against the US dollar to close to $1.35 and dropped by a cent versus the euro to less than €1.15.
UK bonds – known as gilts – suffered a volatile session as events in Westminster and Threadneedle Street pulled them in different directions.
Gilts are small parcels of UK debt. When their prices fall, the yields they pay to investors rise, effectively pushing up the cost of government borrowing.
