Sterling weakens, bond yields fall as UK inflation slows

British government bond yields and the pound sterling fell on Wednesday after data showed UK inflation slowed more than expected in February, easing pressure on finance minister Rachel Reeves ahead of a key fiscal statement.

Sterling weakened 0.3 per cent to $1.2908 and also fell against the euro, which rose 0.4 per cent to 83.71 pence.

Yields on two-year gilts, sensitive to interest rate expectations, dropped 6 basis points to 4.243 per cent as investors increased bets on Bank of England rate cuts, now pricing in 45 basis points of reductions for 2025.

Attribution: Reuters
Subediting: M. S. Salama