All eyes are today will firmly be on The Bank of England interest rate decision at Midday with a 25 basis-point cut all but guaranteed. The key factor after this will be the member vote split, and any potential forward guidance for future rate cuts. Analysts currently suggest there still maybe three or four members who vote to keep rates unchanged, but with unemployment rising recently, and Inflation easing slightly, this should pave the way for further rate cuts into the early part of 2026. UBS are currently forecasting two additional rate cuts of 25 basis-points in February and April.
Turning our attention to this afternoon, we have November’s inflation figures set to be released for The U.S. Current projections suggest prices will have risen slightly in The U.S, from 3% to 3.1% and if this plays out then we could see some US Dollar strength as it could point towards the need to potentially keeping rates unchanged in January. The issue The Federal Reserve have right now is that the job’s market is evidently cooling in The U.S, which would usually see momentum build up for interest rate cuts, and on top of this Donald Trump is weighing in again with comments that the next Chair of The Federal Reserve would believe in lower interest rates a lot more.
Keeping with Central Banks, we have the Bank of Japan’s interest rate decision in the early hours of Friday, with markets expecting a 25 basis-point hike. Japan are currently grappling with persistently high Inflation, rising wages and an improved demand domestically. The rate hike is again all but priced in, so the forward guidance in the press conference will be critical for any movement in JPY currency pairs.
GBP/EUR 1.1372 GBP/USD 1.3344 GBP/AED 4.9030
GBP/AUD 2.0197 GBP/CHF 1.0617 GBP/CAD 1.8384
GBP/NZD 2.3154 EUR/USD 1.1717 GBP/ZAR 22.3836