Goldman Sachs: UK government bonds will strengthen in 2026, with limited political impact.

George Cole, a strategist at Goldman Sachs, said that under the interest rate cut by the Bank of England, UK government bonds will strengthen in 2026, and the government's financing costs will fall to the lowest since 2024. He predicts that the yield on 10-year UK government bonds will fall to 4% by the end of this year. The 40 basis point decline is due to the expectation that falling inflation will prompt action from the Bank of England, which will outweigh concerns about political risks. Cole wrote in a report to clients, "Although during the upcoming local election period, UK risk premiums and political uncertainties may remain high, we believe that the favorable macro environment will drive the yield of UK government bonds lower."