British financial markets on Tuesday increased bets on an earlier start to interest rate cuts by the Bank of England, after a European Central Bank policymaker said further interest rate hikes were "rather unlikely" for the euro zone.
Two year government bond yields, which track interest rate expectations, fell sharply in both Britain and the euro zone, with the two-year gilt yield falling more than 8 basis points on the day to a two-day low of 4.512%.
Financial markets now almost fully price in a first BoE rate cut by June 2024. Previously interest rate futures showed only around a 50% chance of a rate cut by then and pointed to August as the more likely time for a rate cut. (Reporting by David Milliken, Editing by Kylie MacLellan)