Investors are piling into UK government bonds in an attempt to seek safety amid ongoing political turmoil, pushing the yield on 10-year gilts down to a record low.
The yield on 10-year gilts – effectively the interest rate investors receive – fell to 0.37% this morning.
Prices, which move inversely to yields, rose as investors sought out the perceived ‘safe haven’ of government bonds as Sterling hit a 34-year low against the dollar ahead of what is likely to be a tumultuous day in Westminster.
MPs are returning to the Commons this morning after their summer recess, with rebel Conservative MPs hoping to seize control of the legislative agenda today to force Prime Minister Boris Johnson to seek an extension to the Brexit deadline if he cannot strike a deal with the EU.
In response, Johnson threatened yesterday to hold a snap election on 14 October if he loses the vote in parliament.
The pound dropped below the $1.20 milestone this morning for the first time in two years, falling as much as 0.83 per cent in morning trading in London to $1.1994 against the dollar.
This morning’s drop is a record low for Sterling. If the 2016 ‘flash crash’, which was caused by a trading error, is disregarded, it is the lowest it has been against the dollar since 1985.