UK gilt yields drop after weaker-than-expected CPI data

May 20 (Reuters) - British government bond ​yields fell on ⁠Wednesday after weaker-than-expected inflation ​data curbed bets on Bank of England interest rate hikes this year.

Yields ​fell ‌around 5-7 basis points on the day across the range of ⁠maturities, with the interest rate-sensitive two-year gilts ⁠showing the sharpest fall, ​down about 8 basis points to 4.43%.

Earlier on Wednesday the Office for National Statistics said consumer price inflation cooled to 2.8% ​in ‌April from 3.3% in March.

Although the slowdown is likely to mark only a temporary lull caused in part by a fall in regulated energy costs that will reverse later ​this year, it eased some pressure on the BoE to ‌act urgently against the inflationary impact of the Iran war.

"We push back our call ‌for a June BoE hike to July," said J.P. Morgan economist Allan Monks.

"Taken with yesterday's weaker labour market report, the incoming ​data are softer than the BoE expected and buy it more time ‌before potentially delivering higher rates," Monks said.

Yields on medium and longer-dated gilts have hit their highest levels in decades in ⁠recent ⁠sessions as worries about a possible change ‌in political leadership in Britain combined with the inflationary hit from the Iran ​war.

Rate futures ​pointed to around 52 basis points ‌of BoE policy tightening by December - representing full pricing of two quarter-point rate hikes - down from about 60 bps on Tuesday. (Reporting by Andy Bruce Editing by William Schomberg)