MUFG’s Senior Currency Analyst Lee Hardman notes that UK rate markets now price another Bank of England cut as early as next month after a dovish MPC update. Governor Bailey and MPC member Mann have signalled openness to easing, contingent on data. Upcoming UK labour market, CPI and retail sales releases will be key to confirming whether wage growth and inflation are slowing further.

Dovish signals drive earlier cut pricing

"The UK rate market has shifted to price in another Bank of England rate cut as early as next month, following the dovish MPC update earlier this month. Governor Bailey and MPC member Mann have both indicated that they may consider voting for rate cuts, depending on how upcoming economic data evolve."

"The releases of the latest labour market figures, CPI report, and retail‑sales data in the week ahead will offer further insight into whether wage growth and inflation are continuing to slow in the UK. The Bank of England appears to be becoming less concerned about persistent upside inflation risks."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)