Goldman Sachs says UK government bonds will ignore political risks and are expected to perform strongly in 2026.

Goldman Sachs strategist predicts that, driven by the rate cut by the Bank of England, UK government bonds will rise in 2026, and the cost of government borrowing will drop to the lowest level since 2024. George Cole, senior market strategist for the bank in Europe, said that the yield on benchmark 10-year UK government bonds is expected to reach 4% by the end of this year. He believes that the 40 basis point decrease is based on inflation falling, prompting the Bank of England to take action, which will outweigh concerns caused by political risks. Cole stated in a report to clients, "Although UK risk premiums and political uncertainty may remain high during the upcoming local elections, we believe that a favorable macroeconomic environment will push government bond yields lower."