Government borrowing costs, which have been rising in recent months, climbed again on Friday.
The pound, which fell to its lowest level in more than a year on Thursday, also dipped at the market open.
Analysts say it is unusual for those two things to happen together but suggest wider concerns about the strength of the UK economy had driven the pound lower.
On Thursday, the Treasury ruled out any emergency intervention in the markets, saying they continued to “function in an orderly way”.
Globally, there has been a rise in the cost of government borrowing in recent months sparked by investor concerns that US President-elect Donald Trump’s plans to impose new tariffs on imports from Canada, Mexico and China would push up inflation.
UK government bonds – known as “gilts” and which the goverment uses to raise money – are normally considered very safe, with little risk the money will not be repaid. They are mainly bought by financial institutions, such as pension funds.
Interest rates – known as the yield – on government bonds have been going up since around August.
Sir John Gieve, former deputy governor of the Bank of England, told the BBC what was happening to long-term yields in the UK reflected what was happening to yields in the US.
“[In] the US, markets are taking a different view of how their economy is going to go once President Trump is in office and their rates have gone up to 4.75% on 10-year Treasuries and ours have gone up in parallel to that. So I don’t think this is a response to something we’ve done,” he said.
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