GBPJPY: GBP's Decline!

Following the release of ONS data, there was a significant decrease in UK government bond yields as traders adjusted their expectations for future interest rate hikes. Prior to the release, financial markets anticipated a terminal UK Bank Rate surpassing 6%, higher than the current rate of 5%. However, these projections declined to approximately 5.75% during the morning, resulting in a notable drop in UK 2-year Gilt yields that are sensitive to interest rates. Considering that inflation is predicted to decline further in July due to a reduced Ofgem Energy Price Cap, it is plausible that peak rates have already been observed in the United Kingdom.

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