The yield on the UK 10-year gilt rose to 4.9%, its highest since July 2008, as investors reduced expectations for Bank of England (BOE) rate cuts in 2025 due to ongoing inflation concerns and economic uncertainties. Traders scaled back their forecasts for rate reductions to 43 basis points of cuts by December 2025, down from the 50 basis points expected on Friday. This shift came ahead of UK inflation data, which is expected to show the annual inflation rate holding steady at 2.6%, while the core rate slightly dips to 3.4%. Meanwhile, both inflation measures are anticipated to rise on a monthly basis. Investor worries about the UK’s debt levels and the government's fiscal plans have intensified, especially after the Chancellor announced a budget involving substantial borrowing and a large increase in spending, raising concerns about the country’s fiscal sustainability.
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