UK gilts gain in muted trading session ahead of BoE member Haldane’s speech

The UK gilts gained Friday amid a muted trading session that witnessed data of little economic significance. Also, investors are looking forward to Bank of England’s (BoE) member Haldane’s speech, scheduled to be held today by 19:30GMT.

The yield on the benchmark 10-year gilts, slipped 1 basis point to 1.22 percent, the super-long 30-year bond yields fell nearly 1 basis point to 1.77 percent and the yield on the short-term 2-year traded flat at 0.49 percent by 10:05GMT.

The BRC Shop Price index released overnight gave a hint that inflationary pressures might have started to ease in the UK at the end of 2017. The headline index reported a drop in High Street inflation in December from -0.1 percent y/y to -0.6 percent y/y, the weakest rate in nine months. Food inflation on this measure continued to rise in line with global trends, reaching 1.8 percent y/y, a pace notably above the 2017 average. So, the higher deflation was accounted for by the non-food sector, where retailers seem to have relied on increased discounting to lure Christmas shoppers.

Indeed, non-food items reported a 2.1 percent y/y drop in prices, the steepest since the start of the year. Overall, while the figures should be interpreted with a high degree of caution not least due to festive-season distortions, they are consistent with the view that UK CPI inflation is likely to start easing over the coming months to decline to about 2.0 percent y/y by the end of the year.

Meanwhile, the FTSE 100 traded 0.24 percent higher at 7,718.25 by 10:10 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained slightly bearish at -80.91 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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