UK gilts plunge on higher-than-expected Q4 GDP, next week’s BoE policy decision in focus

The UK gilts plunged Thursday, following higher-than-expected fourth quarter gross domestic product (GDP). Also, investors are now curiously eyeing the Bank of England’s monetary policy meeting next week.

The yield on the benchmark 10-year gilts, which moves inversely to its price, jumped over 5 basis points to 1.52 percent, the super-long 30-year bond yields also surged by 5-1/2 basis points to 2.16 percent and the yield on short-term 2-year rose 2 basis points to 0.19 percent by 10:00 GMT.

Britain's economy grew faster than expected in Q4 2016, according to a preliminary GDP release from the Office for National Statistics on Thursday. According to the ONS' data, GDP grew by 0.6 percent in the quarter, in line the consensus forecast of economists who saw growth increasing by 0.5 percent.

Further, on a year-to-year basis, growth was also above expectations, with growth 2.2 percent higher over the course of the last 12 months, compared to a forecast 2.1 percent.

Lastly, the BoE is scheduled to hold its first monetary policy of 2017 on February 2. We at FxWirePro, expect the central bank to remain on hold, following the robust economic growth and recovery in energy prices, which pushed inflation expectations.

Meanwhile, the FTSE 100 rose 0.20 percent to 7,178.75 by 10:00 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bullish at 175.76 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex