On Friday, US House Republican leaders said they would seek to pass a three-month extension of federal borrowing.
authority to buy time for the Democratic-controlled Senate to pass a budget plan that will shrink deficits.
"It's a US holiday today, so it's been a fairly quiet day all round, but we have had quite a decent sell-off in European core markets led by Bunds," said Citi strategist Jamie Searle.
The March gilt future settled 33 ticks lower at 116.63, broadly in line with the equivalent Bund future which settled 42 ticks lower.
Ten-year gilt yields rose almost 5 basis points to 2.06 percent, while their spread with Bund yields was broadly steady at 46 basis points.
Early on Tuesday, investors will focus on British public sector borrowing figures, the first of many data releases this week which are expected to paint a picture of a stagnant economy.
The Debt Management Office will also hold an auction of 1.75 billion pounds ($2.78 billion) of 4 percent 2022 gilts.
"We could see some activity tomorrow around the borrowing data and around the auction," Searle said.
Later on Tuesday, investors will comb a speech by Bank of England Governor Mervyn King for clues to where monetary policy is heading. The bank has held off injecting more cash into the economy since November.
"What people will be looking for will be any hints about where the emphasis is now," said Monument Securities strategist Marc Ostwald.
"Given that the market is veering towards discounting no more QE in the short term, if he (King) feels there is something behind the scene which is a movement on the committee towards doing more QE, then he might want to give some very, very gentle hints that way," he added.
Minutes from the Bank of England's last policy meeting and fourth-quarter gross domestic product data will follow later in the week.
"The main focus is the GDP data on Friday," said Searle.
"The consensus is expecting a small contraction and obviously that is going to generate some headlines. More importantly, if there is a negative surprise, QE could come back on the agenda very quickly and obviously that's going to be very important for the gilt market."