- UK central bank is seen keeping its policy rate intact at 5.25%.
- Bank of England is seen reducing its rates by 75 bps this year.
- GBP/USD should maintain its recent familiar range in the wake of the event.
The Bank of England (BoE) is set to hold its policy rate flat for a sixth meeting in a row on Thursday amid persistent disinflationary pressure in the UK and investors’ repricing of interest rate reductions earlier than anticipated.
Bank of England could lean toward dovish hold
It's anticipated that the Bank of England will maintain the benchmark interest rate at 5.25% after its policy meeting on Thursday at 11:00 GMT. Alongside the policy rate announcement, the bank will release the Monetary Policy Minutes and the Monetary Policy Report, followed by a press conference held by Governor Andrew Bailey.
Although initially anticipated to trail behind the Federal Reserve (Fed) and the European Central Bank (ECB) in initiating their easing measures, the Bank of England (BoE) now appears poised to begin reducing interest rates sooner than expected due to mounting disinflationary pressures.
Furthermore, investors widely anticipate a cut in the Bank of England's interest rates, potentially occurring in August or September, with around a 70% chance of a subsequent decrease in December.
In March, disinflationary trends in the UK accelerated, with the headline Consumer Price Index (CPI) increasing by 3.2% (down from 3.4%) and the core CPI, which excludes food and energy costs, rising by 4.2% (down from 4.5%).
