UK government bond yields rose on Monday on lower risks of Brexit from an economically harmless deal after parliament forced Prime Minister Boris Johnson to send a letter to the European Union demanding a postponement of Britain's departure.
Johnson still wants to get Britain out of the EU by October 31, but after a parliamentary vote on Saturday, he had to ask the EU for a delay of three months, so that it would take effect if he could not pass the necessary legislation before the end of the agreement. Month.
The yield on the 10-year bond rose 4 basis points to 0.75% on Monday, the highest level since Thursday when it hit a three-month high of 0.793%, as investors saw less need to hold safe-haven assets.
"Uncertainty is likely to remain volatile, but with the prospect of no deal on October 31 and diminishing hopes of trading, bond sales are likely to extend in the coming days," said Jimmy Searle, Citi's interest rate strategist. He said.
Goldman Sachs said on Sunday it believed the likelihood of a Brexit out of the EU fell to 5% from 10%.
Johnson wants another vote on his Brexit deal later on Monday, but that could be blocked by the speaker of the House of Commons, who will make a statement on the measures shortly after parliament opens at 1330 GMT.
The short-term interest rate futures for the Pound in 2019 and 2020 fell by about one point, suggesting a marginal decline in the Bank of England's rate cut expectations.
Another measure of interest rate expectations showed about 30% chance of a 25bp rate cut before Governor Mark Carney steps down at the end of January, and a 55% chance of moving lower before the end of 2020.
Speaking in Washington late on Friday, ahead of a UK parliamentary vote, Carney said the Brexit deal would help the country's economy, but "almost existential" concerns about global trade wars could prevent the Bank of England from raising interest rates.
