Financial markets have reduced their expectations for a Bank of England interest rate increase this year, no longer fully pricing in a 25-basis-point hike by year-end, as oil prices and inflation expectations decline.

Current pricing in interest rate swaps indicates the market now anticipates approximately 24 basis points of tightening from the UK central bank within 2024. This represents a decrease from expectations of 27 basis points on Tuesday and around 50 basis points just two weeks ago.

The shift in sentiment coincides with a sharp drop in oil prices, with Brent crude falling over 4% to trade near $73.77 per barrel, its lowest level since February.