Market Outlook: Sterling May Fall if BoE Continues Rate Cuts

Nick Rees from Monex Europe stated that the British pound could decline further due to the low probability of the Bank of England reducing interest rate signals next year following the UK inflation data. Rees emphasized that the BOE had previously guided the market to expect a 100 basis points rate cut next year, and there was very little in the data to convince the central bank to move away from that stance. According to LSEG, UK money markets are currently pricing in only a 58 basis points cut by December 2025. The BOE is expected to keep rates unchanged in its decision on Thursday. The GBP/USD pair fell by 0.2% to 1.2686, while EUR/GBP rose by 0.2% to 0.8271.