LONDON: British government bonds rose modestly on Friday on the coat-tails of gains for German debt and after comments by a Bank of England policymaker that hinted at some openness to further stimulus for the British economy.
Moyeen Islam, fixed-income strategist at Barclays, said gilts were mostly following other markets as they stabilised after recent falls. Investors were reluctant to make big bets before the new Bank of England governor, Mark Carney, arrives in July.
"People are marking time in the UK markets. They are very much waiting for the new regime with Governor Carney before they make any decisive move There seems to be a dearth of activity and a dearth of expectations," he added.
Earlier, Bank of England rate-setter Martin Weale said the central bank must be careful not to cause people to doubt its commitment to its inflation target as it uses the flexibility in its newly reworded mandate to help economic growth.
But he also said policymakers should not be "inflation nutters" who would risk hurting growth in the pursuit of 2 percent inflation, noting that Carney might have more room for manoeuvre on monetary policy.
"It's a relatively dovish speech, which provides a bit of support for the market," Islam said.
At 1115 GMT June gilt futures were 19 ticks higher at 118.26, while German Bunds were 29 ticks up.
German debt prices rose after talk in markets that the European Central Bank was checking the readiness of some banks to handle negative deposit rates.
Ten-year yields fell 2 basis points to 1.843 percent. The spread over Bunds was a touch wider at 54 basis points.
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