Bank of England holds rates, sterling and gilts move on shift in hike bets

The Bank of England's decision to leave Bank Rate at 3.75% on April 30 pushed UK markets to reprice expectations for future rate rises, with gilt yields falling and sterling trading mixed.

Reuters reported that two-year gilt yields fell by about 10 basis points after the announcement. The pound was little changed to slightly higher immediately after the decision, while later market coverage described sterling as softer as traders scaled back their bets on another near-term hike.

The central bank voted 8-1 to hold rates, with one member favoring an increase. Officials said inflation risks remain elevated, in part because of higher energy prices linked to conflict in the Middle East.

The market move reflects a familiar central-bank read-through: if policymakers sound less likely to tighten again soon, shorter-dated bonds often rally and the currency can lose some support.

For now, the focus is on how far those expectations shift once investors fully digest the Bank's minutes and forecasts, and whether sterling's initial reaction holds through the rest of the session.