UK traders scale back Bank of England rate hike bets

LONDON, May 6 (Reuters) - ​Investors ⁠on Wednesday trimmed their ​expectations for interest rate hikes ​by ‌the Bank of England in 2026 ⁠as optimism about ⁠a possible peace ​deal between the U.S. and Iran reversed the previous day's surge ​in ‌gilt yields and sent oil prices lower.

Financial markets were pricing in 52 ​basis point of tightening in borrowing ‌costs by the central bank, equivalent to two quarter-point ‌increases, by the end of this year compared to 63 ​bps when the market opened.

Ten-year gilt ‌yields fell as much as 11 bps to 4.943% at 1019 ⁠GMT, ⁠their lowest since ‌April 27, after reports that U.S. and ​Iranian ​officials were nearing ‌a one-page memorandum to end the war. (Reporting by Suban Abdulla; editing by David Milliken)