Ten-year gilt yields reached 5.101%, their lowest level since August 28, while 30-year yields dropped to a four-month low of 5.554%, LSEG data showed. The 10-year yield later traded at 5.112%, down 4.6 basis points on the day.

Brent crude fell below $100 a barrel on Wednesday. Markets saw increased prospects for a possible resolution to the Middle East conflict after Democrats gained control of both the U.S. Senate and House of Representatives in this week's midterm elections. “Markets look with more optimism on a diplomatic outcome to the conflict in the Middle East,” MUFG analysts Edward Bell and Soojin Kim said in a note.

Lower oil prices have reduced inflation fears and led investors to trim expectations for further BOE rate increases. Markets priced in 94 basis points of rate rises by the end of 2027, 11 basis points less than at the start of the week, LSEG data showed.

Some analysts said expectations for BOE hikes were excessive and that the central bank could push back against them. RBC Capital Markets strategists said they expected Thursday's increase to come with a message that the Monetary Policy Committee did not see a need to follow the initial hike immediately.