U.K. government bond yields, or gilt yields, and sterling jumped on Thursday on increased expectations of the Bank of England raising interest rates at the November policy meeting.

Ten-year gilt yields hit 5.510%, their highest level since 2007, while 30-year gilt yields accelerated to 6.029%, the highest since 1998, LSEG data showed.

Sterling strengthened against the euro, with the euro hitting a 10-week low of 0.8529 pounds.

Surging oil prices and resilient growth are driving inflation concerns, leading investors to fully price in four BOE rate increases by July 2027, LSEG data show. Markets currently expect a 96% chance of the BOE raising the bank rate to 4.0% in November, up from 82% on Wednesday.

Rising U.S. Treasury yields are also contributing to the jump in global sovereign bond yields. "With U.S. yields still driving global rates direction and oil remaining elevated, the hurdle for a meaningful rally in Gilts remains high," Evelyne Gomez-Liechti, multi-asset strategist at Mizuho said in a note.

U.K. Prime Minister Andy Burnham's remarks about strengthening the U.K. and the European Union relations during the Labour party conference were well received, contributing to the pound strength, Mizuho's Gomez-Liechti said.

"Any move by the U.K. to rejoin the EU would likely be seen as a positive by the foreign exchange market, having witnessed sterling's crash following the Brexit vote in 2016," Chris Turner, ING's global head of markets and regional head of research for UK said in a note.

Higher BOE rate hike expectations and the optimism around prospects of improving U.K.-EU relations are likely to boost sterling for now, Monex analysts said in a note. Despite this, the currency might struggle against the dollar ahead of the release of the U.S. non-farm payrolls data due on Friday, the analysts said.

Ten-year gilt yields climb 5.5 basis points to last trade at 5.467%, Tradeweb data show.