The Bank of England is widely expected to cut the bank rate by 25 basis points to 4.00% on Thursday. Policymakers face a tricky mix of slowing growth but high inflation. Focus will therefore center on the BOE's voting pattern and any comments on the rate outlook. In particular, investors will watch to see if there is any change to the BOE's guidance for gradual rate reductions. The following is a selection of analyst comments.

BOE Rate-Cutting Cycle Is Long But Delivers Less

1406 GMT - The Bank of England is expected to announce the fifth interest rate cut in the current easing cycle during Thursday's rate decision. It would mark the third-longest easing cycle in the post-war period, Deutsche Bank's Sanjay Raja and Shreyas Gopal say in a note. However, the scale of easing is below previous easing cycles, the strategists say. "This, in part, reflects the Bank's own guidance of a 'gradual and careful' dial-down of restrictive policy," they say. The minimal scale of easing also raises questions about whether investors could be underestimating BOE interest-rate cuts yet to come in the current cycle, Deutsche Bank says. (miriam.mukuru@wsj.com)

Sterling Looks Vulnerable as BOE Could Cut Rates More Than Expected

1353 GMT - Sterling looks vulnerable as the dollar could recover in the near term and there's a chance the Bank of England could cut interest rates more than markets expect, Pictet Asset Management strategists say in a note. The dollar looks tactically oversold, they say. "We foresee a period of consolidation, in part thanks to a better recent record of positive economic surprises compared to other large economies." Meanwhile, the BOE could deliver three more rate cuts this year, they say. Markets are pricing in two cuts by year-end, LSEG data show. Moreover, sterling looks relatively expensive on a purchasing power basis, the analysts say. Sterling rises 0.2% to $1.3321. (renae.dyer@wsj.com)

BOE Likely to Have Another Rate Cut After Thursday's Decision

1111 GMT - The Bank of England is likely to cut interest rates one more time before year end, after Thursday's interest-rate decision, Jeremy Batstone-Carr, strategist at Raymond James Investment Services says in a note. Markets place a 96% possibility of a rate cut this week, LSEG data show. The U.K. anticipates tax rises during the autumn budget, which could limit households' and businesses ability to spend, Batstone-Carr says. "The BOE may wish to opt for a monetary policy offset to ease the pressure on households and businesses, although not until much later in the year," he says. (miriam.mukuru@wsj.com)

BOE Is Expected to Maintain Quarterly Pace of Rate Cuts

1010 GMT - The Bank of England is likely to stick to a quarterly pace of interest-rate cuts after Thursday's rate decision, TD Securities strategists say in a note. Investors place a 96% probability of a 25 basis-point rate cut by the BOE this week, LSEG data show, leaving focus on forward guidance. "Guidance is unlikely to change, with balanced risks suggesting that the continuation of the [BOE's] Monetary Policy Committee's "gradual and careful approach" is appropriate," the strategists say. (miriam.mukuru@wsj.com)

BOE's Guidance And Voting Pattern Are Key For Sterling

0948 GMT - Sterling's reaction to Thursday's Bank of England meeting depends on the voting pattern for the interest rate decision and the central bank's guidance on future rates, Ebury strategist Matthew Ryan says in a note. He expects the BOE will vote 7-2 to cut rates by 25 basis points. However, it wouldn't be a major surprise if BOE policymakers Swati Dhingra and/or Alan Taylor voted for a 50 basis-point rate cut as they did in May. This would likely trigger a selloff in sterling, as would removing the BOE's guidance for gradual and careful rate cuts, he says. Sterling falls 0.1% to $1.3286 and the euro rises 0.1% to 0.8711 pounds. (renae.dyer@wsj.com)

BOE's Tone Could Matter More Than an Expected Rate Cut

0924 GMT - The Bank of England is widely expected to cut interest rates on Thursday, but what really matters is the tone it sets, says Allspring Global Investments' Lauren van Biljon in a note. The BOE faces a difficult backdrop of high inflation and a weak economy. It will be important to see whether the BOE "sends a clear signal of concern about wage growth and the labor market," the senior portfolio manager says. U.K. wage growth has been stubborn and that points to deeper problems with labor availability, she says. "This is one reason why the Bank of England may need to do [cut rates] more," van Biljon says. At the same time, however, it might be wary of cutting rates too fast. (emese.bartha@wsj.com)

Gilt Yields Rise, Reversing Previous Declines; BOE Awaited

0735 GMT - Yields on U.K. government bonds rise modestly, reversing some of their declines earlier in the week. Investors await a Bank of England interest-rate decision on Thursday. A 25 basis-point rate cut is widely anticipated, with money markets pricing a 96% probability of a rate cut, LSEG data show. "Markets are almost fully pricing in a quarter-point rate cut on Thursday as the U.K. wrestles with lacklustre growth and rising unemployment," AJ Bell's Danni Hewson says in a note. Ten-year gilt yields climb 4 basis points to last trade at 4.544%, Tradeweb data show. They hit a 5-week low of 4.496% on Tuesday. (miriam.mukuru@wsj.com)

Investors to Focus on BOE's Growth, Inflation Forecasts

1248 GMT - Investors are likely to watch the Bank of England projections for U.K. inflation and growth during Thursday's interest-rate decision, AJ Bell's Laith Khalaf says in a note. Investors are widely expecting the BOE to cut rates by 25 basis points at the meeting, leaving focus on any clues about the pace of future reductions. The future rate path remains unclear due to uncertainty around the effects of U.S. tariffs, the unpredictable nature of energy prices, and uncertainty surrounding the U.K.'s autumn budget, he says. In the unlikely event that the central bank leaves rates unchanged this week it would cause "a sizeable backlash in the bond markets," Khalaf says. (miriam.mukuru@wsj.com)

Options Traders Trim Bets Against Sterling Ahead of BOE Decision

1200 GMT - Options traders are trimming bets on sterling falling against the dollar ahead of the Bank of England's meeting Thursday, Convera strategist George Vessey says in a note. Although the BOE is expected to cut interest rates, it is expected to maintain its guidance for gradual rate reductions due to elevated inflation, Vessey says. One-month risk reversals for sterling versus the dollar rise to -0.463% from a low of -0.785 on Friday, LSEG data show. This shows that demand for put options--or bets on the exchange rate falling--is weakening. Many economists expect one or two more rate cuts this year after this week, but some expect Thursday's will mark the last, he says. Sterling falls 0.1% to $1.3274. (renae.dyer@wsj.com)

BOE's Guidance And Voting Pattern Are Key For Sterling

0948 GMT - Sterling's reaction to Thursday's Bank of England meeting depends on the voting pattern for the interest rate decision and the central bank's guidance on future rates, Ebury strategist Matthew Ryan says in a note. He expects the BOE will vote 7-2 to cut rates by 25 basis points. However, it wouldn't be a major surprise if BOE policymakers Swati Dhingra and/or Alan Taylor voted for a 50 basis-point rate cut as they did in May. This would likely trigger a selloff in sterling, as would removing the BOE's guidance for gradual and careful rate cuts, he says. Sterling falls 0.1% to $1.3286 and the euro rises 0.1% to 0.8711 pounds. (renae.dyer@wsj.com)

Bank of England Unlikely Deterred From Rate Cut, Despite Warm Inflation

0849 GMT - Still-high inflation is unlikely to stop the Bank of England from lowering interest rates at this week's meeting of the monetary-policy committee, Grant Slade at Morningstar writes in a note. Annual inflation climbed to 3.6% in June, according to the latest figures, taking it further above the BOE's 2% target. Still, the U.K. jobs market is showing signs of weakening, Slade says. "The modest slack now building in the labour market offers the BOE enhanced scope to gradually lower interest rates," he says. The MPC is to meet Thursday in London, with most economists and investors expecting the bank to reduce its key rate by a quarter of a percentage point to 4.00%. (joshua.kirby@wsj.com; @joshualeokirby)

Gilt Yields Fall as Investors Anticipate BOE Rate Cut

0743 GMT - Yields on U.K. government bonds fall, with the benchmark 10-year yield dropping to its lowest in nearly five weeks. The move comes ahead of a Bank of England decision on Thursday, where a 25 basis-point rate cut is widely expected. Money markets price in a 96% probability of a rate cut, LSEG data show. Increased expectations of the U.S. Federal Reserve cutting interest rates in September after recent weak U.S. jobs data have also contributed to yields falling. Investors place a 93% probability of the Fed cutting interest rates by 25 basis points in September, according to LSEG. The 10-year gilt yield hits a low of 4.498% in early trade. It last trades at 4.514%, Tradeweb data show. (miriam.mukuru@wsj.com)

Sterling Could Fall as U.K. Faces Stagflation

1409 GMT - Sterling could come under pressure as the Bank of England faces a tricky mix of weak growth combined with high inflation, or stagflation, eToro analyst Lale Akoner says. The BOE has probably cut interest rates "way more than they should have" as inflation remains elevated. The BOE is under pressure to prop up the economy as U.K. fiscal policy is tightened but should keep rates on hold until core inflation eases, she says. With U.K. growth set to remain weak relative to the U.S. and the Federal Reserve staying cautious about cutting rates, sterling could fall versus the dollar in three to six months, she says. (renae.dyer@wsj.com)

Sterling Could Rise if BOE Slows Quantitative Tightening

(MORE TO FOLLOW) Dow Jones Newswires

August 06, 2025 10:46 ET (14:46 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.