UK gilts rise after January services PMI misses expectations; BoE interest rate decision in focus

The United Kingdom’s gilts rose during Tuesday’s late afternoon session after the country’s services PMI for the month of January failed to cheer market investors ahead of the Bank of England’s (BoE) monetary policy meeting, scheduled to be held on February 7 by 12:00GMT, which shall provide further direction to the debt market.

The yield on the benchmark 10-year gilts, slipped nearly 1 basis point to 1.269 percent, the super-long 30-year bond yields slumped nearly 2-1/2 basis points to 1.763 percent and the yield on the short-term 2-year remained tad lower at 0.783 percent by 11:15GMT.

At 50.1 in January, the headline seasonally adjusted HIS Markit/CIPS UK Services PMI Business Activity Index was down from 51.2 in December and only fractionally above the crucial 50.0 no-change value. The latest reading was the lowest for two-and-a-half years and the second-weakest since December 2012.

Further, adjusted for seasonal influences, the All Sector Output Index posted 50.3 in January, down from 51.5 in December. The index has posted above the crucial 50.0 no-change mark in each month since August 2016, but the latest reading signalled the slowest pace of expansion over this period and the second-lowest since December 2012.

Meanwhile, the FTSE 100 jumped 1.41 percent to 7,134.25 by 11:20GMT, while at 11:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bearish at -100.92 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex