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2026-02-17 00:11:28
Goldman Sachs: UK Government Bonds Expected to Strengthen in 2026, with Limited Political Impact. Goldman Sachs strategist George Cole points out that UK government bonds are poised to strengthen in 2026, driven by interest rate cuts from the Bank of England, with government financing costs expected to fall to their lowest level since 2024. He predicts that the 10-year UK government bond yield will fall to 4% by the end of this year. The 40 basis point drop in yields is mainly due to lower inflation prompting the Bank of England to cut rates, an impact that will outweigh the disturbances posed by political risks. In a report to clients, Cole wrote: “While market risk premiums and political uncertainty may remain high during the upcoming UK local elections, we judge that a favorable macroeconomic environment will drive UK government bond yields lower.”
