UK Interest rates were kept unchanged at 5.25% last time by the Bank of England.
Inflation has kept dropping though and with the economy sluggish if there is not a cut in this meeting, there might at least be a hint that one is on the way sooner rather than later.
Rising mortgage rates suggest the smart money believes that will not be the case, but according to IG, the UK rates market is pricing in at total of 44 basis points ( 0.44%) of BoE rate cuts in 2024, with a first-rate cut fully priced for September.
“With the UK’s inflation rate for March showing further easing to 3.2%, which is the lowest level since September 2021, market participants have been pricing for a rate cut from the Bank of England (BoE) as early as August this year, potentially front-running the US Fed,” said IG analysts.
UK economy to exit recession
Following close behind the rates decision on Friday is the UK’s GDP number for March, which should confirm the UK is technically out of recession.
In February, the economy grew by 0.1% month-on-month (MoM), following a 0.2% growth in January.
On Friday, S&P's Global UK Services PMI climbed to 55 in April up from 53.1 in March and above a preliminary reading of 54.9.
Marking the fastest rate of business activity growth since May last year, S&P Global director Tim Moore said the figures showed further improvement in the UK economy.
“The latest survey results are consistent with the UK economy growing at a quarterly rate of 0.4% and therefore pulling further out of last year’s shallow recession,” he commented.