BoE preview: Bank Rate seen on hold as Iran-driven energy shock stirs hike talk
GBP/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Barclays | Bullish | 1.4100 |
Goldman Sachs | Bullish | 1.3600 |
UOB | Bullish | 1.3700 |
From the original
The story here is energy, not the rate decision itself. British natural gas and Brent crude have jumped nearly 20% this month on the back of the Iran war, the same driver that pushed the Fed to hike a day earlier and has already moved the ECB. That leaves sterling and UK rates ma
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4 itemsBoE's Greene: Worth waiting before deciding on rate hikes
The desk believes the Bank of England (BoE) is likely to adopt a cautious approach regarding interest rate hikes, particularly in light of geopolitical tensions stemming from the US-Iran conflict. Per the full note [source], BoE's Greene has indicated that while inflation risks are skewed to the upside, the current sluggish economy and loose labor market may mitigate the second-round effects of energy shocks. The market currently prices in a 42% chance of a rate hike in June, which suggests that upcoming economic data will be pivotal in shaping expectations ahead of the meeting.
Bank of England some way off a rate hike despite energy price spike
The desk interprets the Bank of England's position to keep rates on hold, despite rising energy prices, as a signal of a cautious approach to monetary policy. Per the full note from ING, the BoE is unlikely to hike rates at the upcoming meeting on July 30, with expectations of inflation peaking at around 3% later this year, which remains well below their 4% trigger level for significant second-round effects. Although recent energy market surges pose a challenge, they are not considered sufficient to warrant an immediate rate adjustment, likely preserving the current rate environment and keeping traders on alert. With no high-impact events slated on the economic calendar in the next few weeks, the potential for a change in sentiment seems limited at this time.
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