The market widely expects the Bank of England to keep interest rates stable at this week's monetary policy meeting. However, given the renewed impact of the Middle East situation on energy prices, the policy committee may adopt a more cautious or even hawkish approach to communication to prevent the market from underestimating future inflation risks. Since the Bank of England's June meeting, the global energy market has seen significant changes. Renewed tensions in the Middle East have impacted supply expectations, pushing international oil prices back close to $100 per barrel, while European natural gas prices have risen to their highest levels since the initial stages of the conflict. If key shipping routes in the Gulf region continue to be disrupted, energy prices could rise further, increasing global inflationary pressures through energy costs. However, current UK economic data does not yet indicate that the energy shock has translated into more persistent price pressures. Data shows that the UK economy has recently performed better than the Bank of England's previous expectations, with GDP growing by 0.7% in the three months to May. This resilience in economic growth coupled with cooling inflation provides the Bank of England with policy space to maintain stable interest rates . Regarding inflation, the UK Consumer Price Index (CPI) has been below market expectations for three consecutive months, falling to 2.6% in June. Meanwhile, wage growth, a significant source of domestic price pressure, is slowing, and food price increases have also declined. The market believes these factors will reduce the need for the Bank of England to immediately tighten policy. Economists expect the Monetary Policy Committee to keep the benchmark interest rate unchanged at 3.75% at its meeting on Thursday, but the policy statement may emphasize the possibility of future rate hikes. If energy prices rise further due to supply risks, or if businesses and consumers begin to translate rising energy costs into broader price increases, the Bank of England may need to reassess its policy path. The core challenge facing the Bank of England is finding a balance between controlling inflation expectations and avoiding excessive economic constraints . From a market perspective, energy price trends will be a significant factor influencing the pound and expectations for UK interest rates. If oil prices remain high, investors may increase their expectations that the Bank of England will maintain high interest rates for an extended period or even tighten policy again, thus supporting the pound. However, if energy market risks ease and UK inflation continues to decline, the market may repric the potential for future rate cuts. Furthermore, the performance of the UK economy will also influence policy decisions. While the UK economy is currently showing some resilience, consumer spending, business investment, and external demand remain under pressure. The Bank of England needs to determine whether current economic growth is sufficient to withstand energy shocks or whether more accommodative policies are needed to support economic activity. Overall, this meeting is more likely to be one that "keeps interest rates unchanged but strengthens policy vigilance." The Bank of England may not immediately adjust interest rates, but it may send a clear message to the market that rising energy prices remain a significant source of future inflation risks, and policymakers will not easily let their guard down. From the perspective of the pound's movement, the market is currently mainly focused on changes in expectations regarding the Bank of England's policy and the direction of the US dollar. If the Bank of England releases a hawkish signal, the pound may receive short-term support; conversely, if the policy statement focuses more on economic growth risks, the pound may face pressure. The daily chart for GBP/USD shows that the price has maintained a volatile rebound recently, and the market is testing previous resistance areas. Resistance is seen around 1.3400; a break above this area could lead to further movement towards the 1.3450-1.3500 area. Support is seen at 1.3300 and 1.3250. The overall trend still depends on the US dollar's performance and the Bank of England's policy signals. Looking at the 4-hour chart, GBP/USD short-term momentum has recovered somewhat, the moving average structure is gradually improving, and market buying sentiment has strengthened. However, investors may remain cautious ahead of the Bank of England meeting, and the price is likely to fluctuate within a range. If the exchange rate holds above 1.3350, it is expected to continue testing higher resistance levels; if it falls below 1.3300, it may retest the 1.3250 area. Editor's Summary : The Bank of England currently faces a complex policy environment: energy prices have rebounded due to external risks, but domestic inflation, wage growth, and food price pressures have shown signs of easing. Therefore, the probability of maintaining the 3.75% interest rate at this week's meeting is high, while the policy statement will emphasize that inflation risks have not been eliminated. The market's focus will be on whether energy prices continue to rise and whether this shock spreads to core inflation and the wage market. If energy pressures are only a short-term disturbance, the Bank of England may continue to monitor economic data; however, if price pressures intensify again, the likelihood of a policy tightening will significantly increase. The performance of the pound and UK assets will also depend on how the market interprets the central bank's policy signal of "maintaining interest rates but remaining vigilant."