UK Gilt Yield Dips Below 5% Amid Easing Oil Prices

The UK's 10-year gilt yield has fallen below 5% as oil prices have eased, reducing short-term inflation concerns. The decline in Brent crude from two-month highs was triggered by a pause in hostilities between the US and Iran, prompting money markets to reassess their expectations for further monetary tightening.

Investors are now turning their attention to the Bank of England's policy decision later this week, where policymakers are widely expected to leave interest rates unchanged at 3.75%. The recent inflation data has reinforced this view, with annual consumer price growth slowing to a 15-month low of 2.6% in June.

The delayed pass-through of higher wholesale energy costs to regulated household bills has also kept UK inflation below that of the US and the euro area, where the European Central Bank is still expected to raise rates again in September or October.