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UK 10-year Gilt yield recovers ahead of CPI data

FXStreet (Mumbai) - The benchmark Gilt yield in the UK gained as prices fell ahead of the UK CPI report due for release tomorrow.

The Ten-year yield traded at 2.127% at the time of writing, after having recovered from a low of 2.077%. Moreover, the bond prices declined as the UK equity index Ftse recovered to trade in the green after having posted losses during the early European trade. Moreover, the ten-year yield came under pressure in the last week after the Bank of England quarterly inflation report indicated that the bank sees inflation falling below 1% in next six months. The dovish outlook erased rate hike expectations, thereby pushing bond yields lower.

The bond markets in the UK are likely to trade on a cautious note ahead of the tomorrow’s CPI report, which is likely to show that the price pressures remain unchanged at 1.2%. Meanwhile, the data is expected to show a slight uptick in core inflation to 1.6%, up from the previous month’s reading of 1.5%.

The Gilt yields may fall sharply if the price pressures cool down contrary to the market expectations.

Ten-year yield Technical Levels

The yield has an immediate support located at 2.077%, under which it can fall to 2.00%. Meanwhile, resistance Is seen at 2.157% and 2.20%.

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