LONDON: British government gilt yields ​resumed their ⁠climb on Thursday and investors ‌cut their bets on a rate cut by the ​Bank of England this month as the surge in ​energy prices caused ​by the Middle East conflict continued to stoke inflation fears.

Yields on two-year ⁠gilts - which are sensitive to short-term interest rate expectations - rose by 9 basis points to a peak of 3.815%, having fallen ​4 ‌bps on Wednesday.

They ⁠were ⁠up by a less sharp 2 bps at ​0907 GMT but were ‌on course for the biggest ⁠one-week rise since October 2024 and they have increased by more than yields on other European and U.S. government bonds.

The five-year British gilt yield rose as much 8 bps 4.012%, while 10-year yields jumped by 7 bps to 4.517% at one ‌point on Thursday.

Interest rate futures were pricing ⁠a less than a ​one-in-four chance of a BoE rate cut this month and were fully pricing in only ​one quarter-point ‌reduction in borrowing costs ⁠during 2026. (Reporting by Suban ​Abdulla; editing by William Schomberg)