Sterling steady on Tuesday ahead of UK bond auction

The pound sterling held largely steady on Tuesday, slipping just 0.15 per cent to $1.352 against the dollar, as investors awaited a long-dated UK government bond auction and testimony from top Bank of England officials. The euro was little changed at 84.45 pence.

Yields on 30-year gilts eased to a four-week low of 5.341 per cent ahead of the £1.25 billion auction of 2063 bonds. Analysts said the small auction size could support demand despite broader concerns about the UK’s long-term fiscal outlook.

UK gilt yields remain among the highest in developed markets, reflecting financing strains rather than strong growth prospects.

BoE policymaker Catherine Mann suggested late Monday that the central bank may need to slow gilt sales, warning that rate cuts alone may not offset the impact of rising yields.

Meanwhile, market concerns resurfaced after Thames Water confirmed that private equity firm KKR had pulled out of a rescue deal, raising the risk of temporary nationalisation.

BoE Governor Andrew Bailey and other MPC members are due to testify before Parliament later on Tuesday.

Attribution: Reuters
Subediting: M. S. Salama