Will the Bank of England Cut Rates? GBP Outlook & Market Expectations

Key Insights:

• USD: Job growth shows renewed momentum
• EUR: European policymakers keep options open on interest rates
• GBP: Markets on standby ahead of Bank of England rate call

Market Recap:

Sterling held in a tight range on Wednesday as investors looked ahead to today’s Bank of England policy announcement. While the consensus is that rates will remain at 4.0%, markets still see a meaningful chance — roughly one-third — of a cut to 3.75%. The tone of the vote split, and the updated growth and inflation projections will be key in signalling the direction of future policy.

The pound found some support from stronger-than-expected services PMI figures, which showed firmer activity and a continued easing in input cost pressures, now at their lowest level in almost a year.

In the US, the ongoing federal government shutdown has paused the flow of official economic releases, making private-sector data particularly influential. Yesterday’s ADP employment report surprised to the upside, pointing to 42k new jobs in October versus forecasts of 28k, while services PMI also exceeded expectations. The run of firmer data lifted US Treasury yields to their highest levels in a month. Later in the day, President Trump expressed confidence in the economic outlook, projecting third-quarter US growth of 4.2% or higher.

Today's Market Watch:

The Bank of England’s interest-rate decision and updated economic projections later today will be a key driver for sterling in the near term. Markets expect policy to remain unchanged, but the voting split among the nine-member committee — anticipated to be six in favour of holding rates and three pushing for a cut — will be closely watched for signals on the policy path ahead.

For much of the year, the pound benefited from comparatively higher UK interest rates. Recently, though, softer economic data and rising concerns around government finances have weighed on both the currency and UK bond markets. This backdrop leaves sterling exposed: any move toward lower rates, or meaningful downgrades to the Bank’s growth and inflation outlook, could reinforce downward pressure on the pound.

In short, today’s update could set the tone for GBP over the coming months, with markets alert to signs of easing policy and a cooling economy.

6th November 2025

How We Can Help...

Our team are here to help you get more from your money when making international payments. We will work with you to understand your payment needs and offer guidance on the best options available to you.

Get in Touch!

P: 07441 910 897

E: FX-Admin@frank-exchange.com

This document has been prepared solely for information and is not intended as an Inducement concerning the purchase or sale of any financial instrument. By its nature market analysis represents the personal view of the author and no warranty can be, or is, offered as to the accuracy of any such analysis, or that predictions provided in any such analysis will prove to be correct. Should you rely on any analysis, information, or report provided as part of the Service it does so entirely at its own risk, and Frank eXchange Limited accepts no responsibility or liability for any loss or damage you may suffer as a result.  Information and opinions have been obtained from sources believed to be reliable, but no representation is made as to their accuracy. No copy of this document can be taken without prior written permission.