Sterling hits 14-month low after US jobs data, gilt yields rise

LONDON: British assets remained under pressure on Friday from high global borrowing costs, with sterling falling for the fourth day in a row and better-than-expected US jobs data intensifying the move, while gilt yields rose for a fifth consecutive day.

After recording a moderate decline earlier in the day, the pound continued its slide and gilt yields jumped after US government data showed employers added far more jobs than expected in December.

The pound was down 0.53%, after briefly touching $1.2194 , its lowest since November 2023.

Benchmark 10-year gilt yields were up three basis points (bps) on the day to 4.84%, down from the session high of 4.889% after the data. Yields remained below Thursday’s high of 4.925%, their highest since 2008.

British 30-year gilt yields rose as much as 6.8 bps on the day to 5.447% - their highest since July 1998. They were last up 3 bps at 5.411%.

The UK has been among the markets hardest hit by a surge in global borrowing costs, which most analysts say originated in the US due to concerns about rising inflation, reduced chances of a drop in interest rates, and uncertainty over how US President-elect Donald Trump will conduct foreign or economic policy.

That has sent benchmark US 10-year Treasury yields soaring to their highest since November 2023, propped up the dollar and sent ripples through other currencies and stocks.

Traders on Friday bet the US Federal Reserve will wait until at least June to reduce its policy rate.

But British markets have been among the most impacted, with sterling having lost 1.5% on the week, gilts underperforming peers and domestically focused stocks also struggling.