As the Bank of England's rate hike expectations cool down, the two-year British government bond yield has hit a three-month low.

As investors reduce their bets on a rate hike by the Bank of England, the two-year UK government bond yield has fallen to its lowest level since March. With the continued decrease in oil prices easing concerns about inflation risks, the prospect of a rate hike by the Bank of England in the coming months has diminished. Data from the London Stock Exchange Group shows that investors are currently pricing in a total of 19 basis points for a rate hike by the Bank of England in 2026, lower than the 25 basis points reflected a week ago. Tradeweb data shows that the two-year UK government bond yield has dropped by 2 basis points, now standing at 4.098%, reaching a three-month low of 4.080% earlier in the session.