LONDON (Reuters) - Investors reined in further their bets of a full percentage-point interest rate increase by the Bank of England next month, after a top official said it remained to be seen whether rates rise as sharply as the market has been expecting.
Overnight index swaps put a 15% chance on a 100 basis-point increase on Nov. 3, down from 25% before BoE Deputy Governor Ben Broadbent put a question mark over the market's pricing.
Such a big increase in Bank Rate looked a near certainty before Truss was forced to backtrack on her unfunded tax cut plans this month.
Gilt yields rose earlier in the day, reflecting global news but also new unrest among Prime Minister Liz Truss's Conservative Party lawmakers over the direction of her leadership.
The 30-year gilt yield was up by about a basis points at 4.000% at 9:51 am (0851 GMT), having touched a session high 4.103% earlier.
On Wednesday, the 30-year yield tumbled by about 30 basis points to 3.966%, a day after the Bank of England said it would not sell long-dated debt when it launches its quantitative tightening (QT) programme on Nov. 1.
The yield on 20-year British government bonds similarly rose on Thursday, up about two basis points on the day, having also fallen sharply on Wednesday.
Two-year gilt yields were up by 11 basis points on Thursday.
Britain's long-term borrowing costs have come down from 20-year highs from since Truss began to abandon her economic plans. But the difference in yield between gilts and similar German and U.S. government bonds remains significantly wider than before the crisis began.