The tense atmosphere in the UK bond market has eased, but the pound continues to weaken.

Despite the recent easing of the tension in the UK bond market due to the Labour government's "U-turn" on welfare reform policies, the British pound continues to decline. Analyst Chris Turner from ING Bank pointed out in a report that the UK government, facing strong opposition from Labour MPs, has made significant concessions in the welfare bill, which could mean higher taxes in the future. The reason for the weak pound has shifted from previous concerns about" sovereign risk premiums" to a more common macroeconomic narrative: the contradiction between fiscal policy tightening and relatively loose monetary policy.