UK gilts gain after January consumer inflation disappoints investors; 10-year auction in focus

The United Kingdom’s gilts gained during Wednesday’s afternoon session, after the country’s consumer price inflation (CPI) data for the month of January, disappointed market participants, also down from the previous reading in December.

Investors will now keep a close eye on the 10-year auction, scheduled to be held on February 14 by 10:45GMT for further direction in the debt market.

The yield on the benchmark 10-year gilts, slipped 1 basis point to 1.177 percent, the super-long 30-year bond yields remained tad lower at 1.688 percent and the yield on the short-term 2-year traded nearly 1 basis point lower at 0.732 percent by 11:45GMT.

Britain’s consumer price inflation eased in January to a two-year low, data by the Office for National Statistics showed on Wednesday, driven by falls in electricity, gas and fuel prices. The consumer price index came in at 1.8 percent on an annual basis in January, slowing from a 2.1 percent rise in December.

But there will inevitably be continued focus on Brexit today too. After Theresa May’s statement to Parliament yesterday saw her make the case for more time to secure an amended deal with the EU, today should bring details of any proposed amendments – aimed at giving MPs greater control over the process, not least to reduce the risks of a no-deal Brexit – to be voted on following tomorrow’s House of Commons debate, Daiwa Capital Markets reported.

However, with May having promised to come back to Parliament on 26 February with a further update, and parliamentarians seemingly to be given another opportunity to influence Brexit policy the following day, tomorrow’s debate might prove to be a rerun of what happened a fortnight ago when MPs failed to agree on anything of substance, the report added.

Meanwhile, the FTSE 100 remained 0.62 percent higher at 7,178.03 by 11:50GMT, while at 11:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at --38.70 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex