Markets Thursday Open: Bank of England Rate Decision Today; Sterling at April Low, Gilts at Two-Month Low
UK and European markets open Thursday with the Bank of England MPC rate decision at midday the binding macro variable. The pound has weakened to $1.33, near its weakest level since 7 April. UK 10-year gilt yields opened at 4.76%, a fresh two-month low. The FTSE 100 opens at 10,700. Brent crude eased to $87.20 a barrel following the overnight formal Iran-deal signing. The Bank of America commentary raised the August Bank Rate cut probability above 40%; today’s rate decision will define the gilt-market trajectory through Q3 even with a hold outcome.
The softer May UK inflation print Wednesday materially eased the BoE’s decision-tree for today. The market consensus is a 4.5% Bank Rate hold; the principal binding question is the MPC vote split and the language around future cuts. A 5-4 hold-vs-cut split would push gilt yields below 4.75% and sterling lower; a 7-2 hold-vs-cut split would consolidate yields at current levels. The political-mathematical question for Chancellor Rachel Reeves is whether the Burnham continuity-signal positioning crystallises before the post-Makerfield Friday-evening cycle. The Brent $88-95 band that delivers a flat Ofgem October price-cap reset is now below the lower bound.