Societe Generale forecasts the Bank of England will maintain rates at 3.75% amid mixed inflation and labor data, with GBP/USD seasonality turning negative.
The Bank of England is poised to keep its benchmark rate at 3.75% at its upcoming meeting, reflecting mixed economic signals. Inflation expectations have eased, and the labor market is loosening, but rising energy prices and government income support may offset progress on wage growth and headline CPI.
Market pricing suggests around 40 basis points of cuts by year-end, though policy remains mildly restrictive. Hawkish dissent from at least two members, including Huw Pill and Megan Greene, is anticipated. The base case scenario extends the hold through 2026, with risks tilted toward higher rates depending on geopolitical developments.
GBP/USD is expected to face downward pressure in August as seasonal trends turn bearish, following a recent rebound. The BoE’s stance, alongside broader G10 central bank dynamics, will likely influence near-term currency movements.