UK gilts rally in week to Oct 22, 2026: 10-year yield falls to 5.278%

Long-dated gilts gained the most

A gilt's yield is the return investors demand to lend to the UK government. A falling yield means the bond's price is rising. From Oct 19 to Oct 22, yields fell at every maturity shown here. The fall was largest for long maturities.

• The 10-year yield fell from 5.374% to 5.278%. This was its lowest close since Sep 23. It is about 15 basis points (bp) below its Oct 8 high of 5.429%.
• The 20-year yield fell about 13bp, from 5.711% to 5.576%. It is 21bp below its Oct 8 high of 5.787%.
• The 5-year yield fell only about 6bp, to 4.908%.
• The gap between 5-year and 20-year yields narrowed from about 74bp to 67bp.

The rally came despite higher inflation

Most of the fall came on Oct 21–22, when UK inflation reached an 11-month high. This pattern fits investors buying long gilts in the hope of a cautious budget from Chancellor Healey next week. Short-dated yields stayed steadier as markets discussed a possible interest rate rise in November.

The pound rose against the euro and the dollar

• The pound reached 1.1947 euros on Oct 23. That was up from 1.1617 on Sep 25, a gain of about 2.8% in a month.
• The trade-weighted sterling index rose to 86.12, from about 85.2 in early October. The index measures the pound against a basket of currencies of the UK's trading partners.
• The pound was worth 1.3387 US dollars, up from 1.3160 on Oct 14.
• Against the yen, the pound eased to 209.88 yen from 211.61 on Oct 21, as demand for the yen as a safe haven picked up.

Policy rates were unchanged

The official Bank Rate stayed at 3.75%. The sterling overnight index average (SONIA) was 3.7345%. SONIA is the average interest rate banks pay to borrow from each other overnight.