At Any Rate Global FX & Economics: BoE policy meeting preview
Aug 5, 2025
Allan Monks, Chief UK Economist, joins FX strategist James Nelligan to explore the upcoming Bank of England policy meeting. They discuss the precarious state of the UK economy, highlighting weak growth and job market indicators. Monks shares insights on the potential dovish stance of the BoE, along with the challenges of managing market expectations amidst lingering inflation. The duo also investigates the bearish outlook for the British pound against European currencies due to ongoing economic uncertainties.
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Labour Market Weakens Significantly
- UK labour market data signals significant weakness with vacancies falling and unemployment rising sharply.
- This weakening suggests increasing slack and potential moderation in wage growth ahead.
Sticky Inflation Challenges BoE
- Inflation remains persistently high, especially in services, complicating monetary decisions for the Bank of England.
- The BoE faces a balancing act between sticky inflation and weakening growth data in setting policy.
Update Forward Guidance Flexibly
- The BoE could update forward guidance to reflect data-dependent easing pace rather than just "gradual" cuts.
- This approach offers flexibility to respond to labour market weakness and inflation persistence.