BoE Expected to Cut Rates to 4.00% Amid Growth Concerns

August 7, 2025 — The Bank of England is widely expected to announce a 25 basis point rate cut, lowering the benchmark interest rate from 4.25% to 4.00%, as policymakers prioritize economic growth over inflation containment.

BOE Rate Forecast and Market Implications

This would mark the third rate cut of 2025, with markets anticipating a fourth in November to bring the base rate to 3.75%. The Monetary Policy Committee (MPC) is likely to vote 7-2 in favor of the cut, reflecting growing consensus around easing policy despite sticky inflation.

UK Economic Backdrop

UK GDP contracted for two consecutive months, while unemployment rose to 4.7%.

Inflation remains elevated, with CPI at 3.6% and core CPI at 3.7%, well above the BoE’s 2% target.

Forex Market Reaction

GBP/USD trades near 1.3360, with downside risk toward 1.3140 if the BoE signals further easing.

Traders expect volatility post-announcement, especially if Governor Andrew Bailey hints at a slower pace of future cuts.

Key Economic Events: GBP - BoE Interest Rate Decision (Aug)

Previous Rate: 4.25% Forecast Rate: 4.00%

Actual Rate: 4.00%