LONDON (Reuters) – British government bond yields climbed to their highest since early June on Friday, after Prime Minister Boris Johnson’s Conservatives won a national election by a margin that surpassed the expectations of most investors.

The benchmark 10-year gilt yield GB10YT=RR rose 0.895% at the market open, before easing back to 0.85% as of 0915 GMT, up three basis points on the day.

Investors rushed to unwind hedges against weakness in the pound on Friday after the Conservatives secured their biggest majority in parliament since Margaret Thatcher’s victory in 1987, pushing the British currency to its highest against the euro since July 2016.

Contributing to the rise in yields, the United States offered to cut tariffs on existing Chinese goods and suspend those scheduled to take effect on Dec. 15, a precursor to a possible trade deal.

The rise in gilt yields was most notable for five- and 10-year bonds. Longer-dated yields had returned to be broadly flat on the day by 0915 GMT.

Short sterling interest rate futures <0#FSS:> fell across the 2020, 2021 and 2022 contracts, indicating a reversal of bets that the Bank of England would cut interest rates.

“Sterling has already bounced and could go higher if the Bank of England remove their dovish rhetoric, as we suspect,” said Karen Ward, chief market strategist at JPMorgan Asset Management.

The yield spread between 10-year British and German government bonds EU10YT=RR stood at 109 basis points, up a couple of basis points on the day.

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