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

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Zawya
an hour ago
- Zawya
Arab Bank Group net income surges 6% to $535mln in H1
Arab Bank Group has reported solid results for the first half of the year, with its net income after tax surging by 6% to hit $535.3 million over last year's figure of 502.8 million. The Group maintained its strong capital base with a total equity of $12.5 billion. Announcing the results for the six-month period ended June 30, 2025, Arab Bank said the Group's assets grew by 9% to hit $75.2 billion, while its loans rose to $39.8 billion, recording a net growth of 6%. The bank's deposits too posted growth surging by 9% to reach $55.3 billion, it stated. On the solid performance, Sabih Masri, the Chairman of the Board of Directors at Arab Bank Group said the strong results achieved in the first half are a clear testament to the effectiveness of the bank's strategy and the resilience of its operating model. He pointed out that despite ongoing economic headwinds and regional geopolitical uncertainties, the bank continued to prudently grow its operations and deliver sustainable growth and healthy returns for shareholders. Looking ahead, Masri affirmed the bank's commitment to executing its integrated corporate strategy and long-term vision, with a clear focus on meeting the evolving expectations of both shareholders and clients. On its achievements during the first six months, the top official said its European unit, Arab Bank Switzerland had successfully completed the merger of Gonet & Cie SA (Gonet) and ONE swiss bank, thus strengthening its presence in Switzerland and operational entities abroad. Arab Bank Switzerland Group assets under management increased to reach CHF 18 billion. CEO Randa Sadik said the underlying performance of the Arab Bank Group continues its growth trajectory with first half results, recording a healthy increase of 5% in revenue while maintaining a solid balance sheet growth of 9%. Sadik pointed out that the Group's loan-to-deposit ratio stood at 72% and credit provisions held against non-performing loans continue to exceed 100%. Arab Bank Group maintains a strong capital base that is predominantly composed of common equity with a capital adequacy ratio of 17.1%, she noted. According to her, the bank remains focused on maintaining high liquidity and preserving its high asset quality. Arab Bank, she stated, had recently received the "Best Bank in the Middle East 2025" award from New York-based Global Finance magazine, a testament to its leading position in the regional banking sector. One of the largest financial institutions in the Middle East, Arab Bank is a Jordanian bank headquartered in capital Amman. Operating as an universal bank, it serves clients in more than 600 branches spanning five continents. Copyright 2024 Al Hilal Publishing and Marketing Group Provided by SyndiGate Media Inc. (


The National
10 hours ago
- The National
US and EU strike an 'across the board' agreement on tariffs
US President Donald Trump and European Commission President Ursula von der Leyen said on Sunday they had reached a deal to end a transatlantic tariff dispute, averting the risk of a full-scale trade war. Mr Trump and Ms Von der Leyen held private talks at one of Mr Trump's golf courses in Scotland and later announced what the US President called an 'across-the-board' agreement. The breakthrough comes just days before an August 1 deadline for the European Union to strike a deal with Washington or face a sweeping 30 per cent US tariff on EU goods. 'We have reached a deal. It's a good deal for everybody,' Mr Trump told reporters. Mr Trump said the deal involved a baseline levy of 15 per cent on EU exports to the United States, the same level secured by Japan, including for the bloc's crucial auto sector, which is currently being taxed at 25 per cent. 'We are agreeing that the tariff straight across, for cars and everything else, will be a straight across tariff of 15 per cent,' he added. Mr Trump also said the bloc had agreed to purchase "$750 billion worth of energy' from the United States, as well as $600 billion more in additional investments in the country. Negotiating on behalf of the EU's 27 countries, Ms Von der Leyen's European Commission had been pushing hard to salvage a trading relationship worth an annual $1.9 trillion in goods and services. 'It's a good deal,' the EU chief told reporters, sitting alongside Mr Trump following their hour-long talks. 'It will bring stability. It will bring predictability. That's very important for our businesses on both sides of the Atlantic,' she said. The EU has been hit by multiple waves of tariffs since Mr Trump reclaimed the White House. It is currently subject to a 25 per cent levy on cars, 50 per cent on steel and aluminium, and an across-the-board tariff of 10 per cent, which Washington threatens to hike to 30 per cent in a no-deal scenario. Brussels has been focused on getting a deal to avoid sweeping tariffs that would further harm its sluggish economy with retaliation held out as a last resort.

Zawya
16 hours ago
- Zawya
Minister of Planning, Economic Development, and International Cooperation Discusses Future Economic, Trade, and Investment Relations with British Minister for International Development Between The Two Countries
H.E. Dr. Rania Al-Mashat, Minister of Planning, Economic Development, and International Cooperation, held a discussion session with Baroness Jenny Chapman, UK Minister of State for International Development, during the G20 Development Ministers' Meeting in South Africa. The meetings witnessed extensive discussions on the future of economic, trade, and investment relations between the two countries in light of their close partnership, as well as joint coordination in international forums to advance efforts to restructure the global financial system and review proposed efforts to restructure the working mechanisms of the United Nations, as well as discussing the outcomes of the 4th International Conference on Financing for Development in Seville. During the meeting, both sides expressed their anticipation of the upcoming visit to Cairo announced by the UK Prime Minister's Office, which will represent a qualitative shift in bilateral Egyptian-British relations, elevating them to a strategic partnership level, in addition to its role in opening up avenues for cooperation across various levels between the two sides. It is also an extension of the strategic partnership between Egypt and the European Union, which was announced in 2024. During the meeting, the two ministers agreed on the need to activate the recommendations issued by various international forums to restructure the global financial system, ensuring a more efficient and fair financial architecture, especially for developing countries, achieving greater transparency in financing mechanisms, and expanding concessional financing. They also discussed proposals for restructuring the working mechanisms of the United Nations system to make it more influential in the global economy, emphasizing the need to adopt comprehensive coordination and follow-up mechanisms to ensure sustainability and enhance national participation in UN efforts. The meeting witnessed extensive discussions on various aspects of the partnership between the Arab Republic of Egypt and the United Kingdom, particularly in terms of trade exchange, British investments in Egypt, economic relations, and development cooperation. H.E. Dr. Al-Mashat reaffirmed Egypt's keenness to develop these relations and build on the pioneering results achieved over the past years, particularly in food security, support for start-ups, and small and medium enterprises. The two sides reviewed frameworks for bilateral cooperation in the field of development finance, the UK's contribution to financing development policies through the World Bank, as well as the role of UK Export Finance (UKEF) which supports project financing in Egypt, and the financing mechanisms provided by British International Investment (BII), which considers Egypt one of its priority markets. In this context, the Minister of Planning, Economic Development and International Cooperation reviewed preparations for launching the 'National Narrative for Economic Development,' which is an executive program to promote structural transformation in the Egyptian economy toward tradable sectors, encourage foreign direct investment, industrial development, and support labor market and employment. H.E. noted that since March 2024, the government has implemented economic and structural reforms that have contributed to macroeconomic stability and created a favorable investment climate and business environment. The two sides also discussed close cooperation within the framework of the Egyptian National Platform for Green Projects, the 'NWFE' program, which focuses on linking water, food, and energy nexus, particularly through BII and its financing to support energy and green hydrogen projects. In addition to the UK's role in providing support and assistance to global climate funds, represented by the Climate Investment Funds (CIF) and the Green Climate Fund (GCF). Additionally, the meeting highlighted the launch of the 'Green Growth: Egypt–UK' campaign in June 2025, which will continue until COP30 Climate Conference to accelerate green economy partnerships. Given that the UK is one of the largest investors in Egypt in sectors in the energy, telecommunications, pharmaceuticals, and consumer goods, and in light of the Memorandum of Understanding signed in 2024 between the Egyptian General Authority for Investment and Free Zones (GAFI) and UKEF to strengthen investment relations, the two ministers explored the significant role of the Egyptian-British Business Association (BEBA) and the Egyptian-British Chamber of Commerce (EBCC) in connecting companies, facilitating investment, and enhancing trade exchange between the two countries. For her part, the British Minister emphasized the diverse historical relations between the two countries, which share close ties and cooperation across various fields. H.E. also praised Egypt's significant efforts in addressing the humanitarian crisis facing Palestinians in Gaza and the role of the Egyptian leadership in delivering humanitarian aid to the Strip, affirming her country's full support for these efforts. She expressed her hope for reaching an immediate and sustainable ceasefire that would allow safe and regular delivery of aid. Distributed by APO Group on behalf of Ministry of Planning, Economic Development, and International Cooperation - Egypt.