Gilt and short sterling futures rose, mirroring the bund and other European markets after the euro and sterling surged higher against the dollar, and as traders took a nonchalant view of UK domestic economic growth data.
Sterling hit its strongest levels against the dollar in almost two years and the euro broke through key resistance against the US currency to trade at its highest in 18 months.
The drama in the currency market overshadowed the second estimate of third- quarter UK GDP showing the economy grew by an unrevised 0.7 per cent on the quarter and a slightly downwardly revised 2.7 per cent on a year ago.
Household spending growth more than halved compared with the second quarter as retail sales slowed. The mixed report reinforced expectations that the Bank of England will keep interest rates on hold until a clearer picture of the economy develops.
December long gilt futures had settled 36 ticks higher at 109.90, while the equivalent bund contract rose about 49 ticks. Short sterling contracts were flat to three ticks higher across the strip.
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In the cash market, yields on ten-year gilts were four basis points weaker at 4.53 per cent.