Gilts fell early on Thursday, tracking similar moves in eurozone government bonds, as dealers set up for a Bank of England interest rate decision at 1100 GMT that remains too close to call. Analysts are split down the middle on whether the BoE will hike its base rate by a quarter point to 4.25 percent or leave borrowing costs steady at 4.0 percent and instead wait until its May meeting to raise rates. Short sterling interest rate futures, which traded mostly flat on Wednesday, were down across the strip, indicating bets had risen on higher interest rates in the future.
The market is already predicting half a point of rate hikes by the end of June. Official data due at 0830 GMT are expected to show a narrowing in the UK's international trade deficit to 4.6 billion pounds in February from 5.6 billion pounds but the report is not likely to affect the bond market.///