Finance
Brokers turn more bullish towards gilts, pound after UK budget
Published by Global Banking & Finance Review®
Posted on November 26, 2025
2 min readLast updated: January 20, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on November 26, 2025
2 min readLast updated: January 20, 2026
Brokers are optimistic about UK gilts and the pound following the budget announcement, with fiscal headroom increased and a dovish BoE outlook anticipated.
LONDON (Reuters) -Some brokers shifted their trade recommendations in favour of British government bonds and the pound on Wednesday, after the country's finance minister Rachel Reeves announced a big tax raising budget.
Nomura said it had closed its recommendation to buy the euro against sterling as the budget "avoided the major tail risks that could have hurt" the pound.
They said the budget's "overall fiscal 'headroom'” was increased, and so anticipate short sterling positions -- bets the currency will fall -- that had been popular going into the budget will be removed.
That would help the pound rise against the euro. The common currency dropped to as low as 87.55 pence on Wednesday, its lowest in nearly a month.
Meanwhile, Mizuho recommended positioning for the 10-year British government bond, or gilt, to outperform the equivalent 10-year U.S. Treasury.
They said Reeves' budget "knocks off 0.3% from CPI in 2026; allowing for a more dovish BoE outlook."
Dovish is central bank jargon for being more willing to pursue rate cuts, something that supports government bonds.
British 10-year yields dropped 6 basis points on Wednesday, to 4.43%, while the 10-year Treasury yield was flat at 4.01%.
(Reporting by Alun John; Editing by Amanda Cooper)
Currency hedging is a financial strategy used to protect against potential losses from fluctuations in currency exchange rates.
A dovish monetary policy is one that favors lower interest rates and increased money supply to stimulate economic growth.
Short positions are investments that benefit from a decline in the price of an asset, allowing traders to profit from falling markets.
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