UK gilts jump after March consumer price inflation disappoints market sentiments; eyes on retail sales data

The UK gilts jumped during European session Wednesday after the country’s consumer price inflation data for the month of March disappointed market participants. Now, investors shall be eyeing the retail sales data for the similar period and 10-year gilt auction, both scheduled on April 19 by 04:30GMT and 05:40GMT respectively.

The yield on the benchmark 10-year gilts slumped nearly 3 basis points to 1.41 percent, the super-long 30-year bond yields plunged close to 2 basis points to 1.80 percent and the yield on the short-term 2-year traded 3-1/2 basis points lower at 0.85 percent by 10:35GMT.

Inflation surprised on the downside for the second month in a row in March. The annual rate of ‘headline’ CPI inflation dropped to 2.5 percent from 2.7 percent in February. This was below the consensus expectation that inflation would hold steady at 2.7 percent and was the third fall in the last four months following last November’s peak of 3.1 percent. Lastly, ‘core’ CPI inflation moved down to 2.3 percent from 2.4 percent.

Both sterling and UK gilt yields have initially moved down sharply in response to the data, which are seen as weakening the case for further interest rate rises from the Bank of England (BoE). However, BoE policymakers will also be mindful of evidence of a gradual increase in domestic inflationary pressures.

Meanwhile, the FTSE 100 traded 0.73 percent higher at 7,278.76 by 10:40 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bearish at -107.43 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex

Lastly, FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest