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2025-10-29 20:43:14
[Bank of England Rate Cut Probability Surges to 74%, Pound Falls to 2.5-Year Low] ⑴ Market expectations for a Bank of England rate cut have risen significantly, mainly driven by weaker-than-expected inflation and employment data. ⑵ The pound sterling and UK gilt yields are under pressure, creating a double whammy for the rate cut prospect. ⑶ The fiscal austerity measures that may be introduced in the November 26th budget provide support for an earlier rate cut by the central bank. ⑷ The interest rate market shows a 74% probability of a rate cut in December, a significant increase from 44% in early October. ⑸ The 10-year UK gilt yield held steady at 4.399%, close to the six-and-a-half-month low of 4.369% reached on Tuesday. ⑹ The pound fell to 0.8813 against the euro, its lowest level in two and a half years, with the downward trend continuing to strengthen. ⑺ Weak economic data and a shift in fiscal policy together constitute reasons for a rate cut, and a monetary easing cycle may be about to begin. ⑻ Pound assets are facing repricing, and the linked decline in exchange rates and yields reflects a significant shift in market expectations.
