logo

Sterling tiptoes lower; 40-year gilt auction, BoE speakers in focus

Zawya03-06-2025
The pound trod water on Tuesday, holding mostly steady against the dollar and the euro, ahead of a raft of Bank of England speakers and an auction of long-dated government bonds that may offer a gauge of investor confidence in Britain's finances.
Sterling was last down 0.15% against the dollar at $1.352, near last month's more-than three-year highs. The euro was also stable against the pound at 84.45 pence.
Investors are torn between having to navigate the turbulence across markets stemming from the U.S. administration's erratic tariff policies and growing concern about the long-term finances of developed economies.
Long-dated bonds in the United States, Japan and the UK in particular have been punished hard, which has pushed yields up sharply. In the case of the UK, 30-year gilt yields are the highest among developed economies, at 5.36%. Their extra premium over 30-year U.S. Treasuries, which are yielding some 5%, is not the result of better growth expectations, but of more precarious financing, which has stirred up extra volatility for the pound.
On Tuesday, British 30-year government bond yields fell to a four-week low of 5.341%, down 7 basis points on the day and slightly outperforming U.S. Treasuries ahead of the auction of 1.25 billion pounds ($1.69 billion) of 2063 gilts.
Bank of England Monetary Policy Committee member Catherine Mann suggested late on Monday the central bank should reconsider the pace at which it sells gilts, as the rise in long-dated yields could not be adequately offset by cutting rates faster.
Strategists at RBC said Tuesday's bond auction was small by historic standards, which should boost demand, although they were less attracted by the longer-term prospects for the bond due to the prospect of more supply in that maturity bracket.
"In the lead up to the UK's bond auction, UK gilts are outperforming across the curve and yields are falling. This suggests that bond vigilantes are out of sight for now, and that the bond market is not expecting any problem in today's auction," XTB research director Kathleen Brooks said.
In domestic news, Thames Water, Britain's biggest supplier, said on Tuesday that U.S. private equity firm KKR had pulled out of a multi-billion pound rescue plan, reigniting fears the company will need to be nationalised to avoid financial collapse.
The government has said it is on standby in case Thames Water fails to recapitalise and needs to go into temporary nationalisation to keep services running.
BoE Governor Andrew Bailey, Deputy Governor Sarah Breeden, Mann herself and external MPC member Swati Dhingra are due to appear before a parliament committee at 0915 GMT.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Political solution without Palestinian statehood is 'cynical and illegal', says ICJ lawyer
Political solution without Palestinian statehood is 'cynical and illegal', says ICJ lawyer

The National

time3 hours ago

  • The National

Political solution without Palestinian statehood is 'cynical and illegal', says ICJ lawyer

With France saying it will recognise Palestine in September, making it the first G7 nation to do so, other countries such as the UK and Germany, which are holding out, have called for a political solution to the Palestine issue. That two-state solution between Israel and Palestine, however, cannot be reached without recognising Palestine as a state, Ardi Imseis, a professor of law at Queen's University in Canada, told The National. Mr Imseis is a former UN official and has represented states before the International Court of Justice, which last year found Israel to be under an obligation to end its unlawful presence in the occupied Palestinian territory and make reparations for the damage caused. "Recognition is a political prerogative of states," he said. They can urge for a political resolution to the problem without recognising one or the other states, Mr Imseis said, although that "does not make sense". "This is because if you have a two-state solution, one would assume you would need to have two states be part of that solution," he said. Under international law, the Palestinian people have the right to self-determination in a state of their own. "This right is peremptory and inalienable," he said. The international community has an obligation to help Palestinians realise that right, he added. "However, if states make the emergence of a Palestinian state contingent on successful negotiations with Israel, then, in effect, that places Israel in a position of holding a veto power over the exercise by the Palestinian people of their right of self-determination," he said. "It's a cyclical, cynical and ultimately illegal policy." Mr Imseis said that Israel was a "bad faith illegal occupier" with no intention to allow the establishment of a Palestinian state. Following France's announcement, Israeli Prime Minister Benjamin Netanyahu lashed out at French President Emmanuel Macron and said that a Palestinian state would create a "launch pad to annihilate Israel". France, the US and the UK are three of the five members of the UN Security Council with veto power, if and when the next vote comes to admit the state of Palestine to UN membership. The US used its veto the last time such a vote took place, on April 18, 2024. British Prime Minister Keir Starmer, who is under increasing pressure from 220 Members of Parliament who wrote to him urging him to recognise a Palestinian state, said he does support the move. But, he said, it should be part of a "wider plan" which results in security for Palestinians and Israelis. At least 140 out of the world's 193 members of the UN General Assembly recognise Palestine as a state. In 2012, the General Assembly gave Palestine non-member observer state status. "That means, that within the UN system, the state of Palestine already exists," Mr Imseis said.

Britain 'taking forward' Gaza food airdrop plan: PM Starmer's office
Britain 'taking forward' Gaza food airdrop plan: PM Starmer's office

Khaleej Times

time4 hours ago

  • Khaleej Times

Britain 'taking forward' Gaza food airdrop plan: PM Starmer's office

British Prime Minister Keir Starmer on Saturday spoke to his French and German counterparts and outlined UK plans to get aid to people in Gaza and evacuate sick and injured children, his office said. "The prime minister set out how the UK will also be taking forward plans to work with partners such as Jordan to airdrop aid and evacuate children requiring medical assistance," a statement said. In a phone conversation, Starmer, French President Emmanuel Macron and the German Chancellor Friedrich Merz discussed the humanitarian situation in Gaza "which they agreed is appalling". "They all agreed it would be vital to ensure robust plans are in place to turn an urgently needed ceasefire into lasting peace," according to a readout released by Downing Street. "They discussed their intention to work closely together on a plan.... which would pave the way to a long-term solution and security in the region. They agreed that once this plan was worked up, they would seek to bring in other key partners, including in the region, to advance it," it added. The discussion comes a day after UN Secretary-General Antonio Guterres slammed the international community for turning a blind eye to widespread starvation in the Gaza Strip, calling it a "moral crisis that challenges the global conscience". Aid groups have warned of surging cases of starvation, particularly among children, in war-ravaged Gaza, which Israel placed under an aid blockade in March amid its ongoing war with Hamas. That blockade was partially eased two months later. The trickle of aid since then has been controlled by the Israeli- and US-backed Gaza Humanitarian Foundation.

Minister of State at Ministry of Foreign Affairs Meets Under Secretary of State for Africa at United Kingdom (UK) Foreign Office
Minister of State at Ministry of Foreign Affairs Meets Under Secretary of State for Africa at United Kingdom (UK) Foreign Office

Zawya

time8 hours ago

  • Zawya

Minister of State at Ministry of Foreign Affairs Meets Under Secretary of State for Africa at United Kingdom (UK) Foreign Office

HE Minister of State at the Ministry of Foreign Affairs Dr. Mohammed bin Abdulaziz bin Saleh Al Khulaifi met on Friday with HE Parliamentary Under Secretary of State for Africa at the UK Foreign, Commonwealth and Development Office, Lord Collins of Highbury. During the meeting, they reviewed cooperation relations between the two countries and means to support and enhance them. They also discussed the latest regional and international developments, particularly in the African continent. Distributed by APO Group on behalf of Ministry of Foreign Affairs of The State of Qatar.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store