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2025-08-02 20:00:23
Inflation Rebounds, But Will the Bank of England Cut Interest Rates? A Big Gamble is Underway. ⑴ The Bank of England is about to hold its interest rate meeting, and the market is closely watching its policy direction. ⑵ The market generally expects the Bank of England to cut interest rates by 25 basis points, bringing the rate to 4.0%. ⑶ Data shows that the GBP Overnight Index Swap (GBP OIS) indicates an 82% probability of this scenario. ⑷ However, inflationary pressures in the UK intensified in June, creating uncertainty about the Bank of England's easing policy. ⑸ UK employment data for May was also mixed, with a significant increase in employment but a slight rise in the unemployment rate. ⑹ If the Bank of England cuts interest rates as expected, market focus will shift to its forward guidance. ⑺ Market traders are generally dovish, and if the Bank of England sends a more dovish signal, it could lead to further weakening of the pound. ⑻ Furthermore, the UK government's fiscal difficulties, such as new taxes and spending cuts, could exacerbate market concerns, putting pressure on the pound.
