The Bank of England’s interest rate decision has sparked market optimism about potential future cuts, defying comments from bank officials that ruled out easing monetary policy.
Money markets now see a significant increase in bets for further rate reductions this year, with fully priced quarter-point cuts and an 80% chance of another cut by the end of the year.
The pound’s value took a hit, sinking more than 1% to $1.2361, as traders shifted their focus from inflation concerns to the prospect of easier monetary policy.
Despite this shift, analysts at abrdn believe weak growth will continue to outweigh concerns about inflation in the UK.
Source: https://www.bloomberg.com/news/articles/2025-02-06/traders-boost-boe-easing-bets-favor-three-more-cuts-in-2025