Investors are becoming increasingly convinced that the Bank of England is coming to the end of its programme of inflation-tackling interest rate rises, with hedge funds unwinding bets against the UK's £2.5tn government bond market as a result, according to a report by FT.com.

The report cites data from S&P Global Market Intelligence as showing that the total value of the UK’s bonds borrowed by investors to wager on a fall in prices this week dropped below £65bn, the lowest level seen since at least 2006.

It later moved slightly higher on Thursday after the Bank of England paused interest rate rises.

Having been the worst performing leading sovereign debt market in the first half of the year, the decline in short positions comes as gilts have staged a comeback in recent weeks with an Ice Bank of America index of gilts rising by 2.7% over the past month, although it remains down by over 3% since the start of the year.