UK gilts surge on higher safe-haven demand following uncertainties over Brexit deal; investors shrug-off higher-than-expected construction PMI

The UK gilts surged during the mid-European session Friday as investors crowded into safe-haven assets, following uncertainties over the Brexit negotiations. Prime Minister Theresa May will deliver a keynote speech later in the day for further insight into the debt market.

The yield on the benchmark 10-year gilts, slumped 4 basis points to 1.43 percent, the super-long 30-year bond yields plunged 3 basis points to 1.84 percent and the yield on the short-term 2-year traded 2-1/2 basis points lower at 0.74 percent by 10:30GMT.

Theresa May will on Friday attempt to allay fears in Brussels that she wants to “have her cake and eat it”, as she sets out for the first time her detailed proposals for a future British trading relationship with the EU. In a long-awaited speech, the PM will deliver what aides said would be a “warm message to Europe”, including promises that Britain would not try to undercut the EU in areas such as regulation and state aid, Financial Times reported.

The UK is due to leave the EU on 29 March 2019 but it wants a transition period lasting around two years after that, intended to smooth the way to the future post-Brexit relationship between the UK and the EU.

Meanwhile, the FTSE 100 traded 0.63 percent lower at 7,130.75 by 10:30 GMT, while at 10:00GMT, the FxWirePro's Hourly Pound Strength Index remained slightly bearish at -68.68 (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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