UK gilts remain tad lower in muted trading session

The UK gilts remained tad lower Friday as investors booked in profits amid a muted trading session that witnessed no data of economic significance. Also, the Bank of England (BoE) kept the benchmark interest rate unchanged at the monetary policy meeting, held late yesterday.

The yield on the benchmark 10-year gilts, rose 1 basis point to 1.04 percent, the super-long 30-year bond yields also climbed 1 basis point to 1.74 percent and the yield on the short-term 2-year traded 1/2 basis point higher at 0.17 percent by 12:10 GMT.

The BoE surprised markets with two members joining MPC Kristin Forbes, the most hawkish member so far, and voting all three in favour of a 25 basis points rate hike at this week’s monetary policy meeting. Reacting to the MPC minutes, GBP gained some ground and UK Gilts came under pressure.

The unexpected shift comes against an uncertain backdrop for the U.K., with real earnings falling, consumer spending weakening and Prime Minister Theresa May unexpectedly losing her parliamentary majority after calling a snap election.

Meanwhile, the FTSE 100 rose 0.69 percent or 51.39 points to 7,470.75 by 12:30 GMT, while at 12:00GMT, the FxWirePro's Hourly Pound Strength Index remained neutral at -39.72 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex