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The British pound fell from the day's highs after the Bank of England left Bank Rate unchanged but left the door open to a cut in November.
The Bank met expectations with a 7-2 vote to keep interest rates steady.
But it was always going to be the guidance where the interest for traders lay. And what struck me was a definite sense that the Bank thinks it's still winning the war on inflation.
The pertinent parts of the statement read:
"Underlying disinflation has generally continued.
"Twelve-month CPI inflation was 3.8% in August, and is expected to increase slightly in September, before falling towards the 2% target thereafter.
"Pay growth remains elevated, but has fallen and is expected to slow significantly over the rest of the year.
"Services consumer price inflation has been broadly flat over recent months.
The statement does clarify that it does see risks to inflation, but in general, there is nothing here to suggest it is ready to deviate from a quarterly pace of rate reductions. There is no hint of alarm about the trajectory of inflation that might suggest a break from the quarterly run rate to cuts is warranted.
This puts November in play, and means there is scope for the market to 'price in' that cut, given it held a 50-50 chance of such a development.
"A Q4-25 rate cut remains very much on the table with the MPC doing little to shift market expectations one way or another," says Sanjay Raja, Chief UK Economist at Deutsche Bank.
A 'dovish' repricing in favour of a November cut implies a weaker pound, all else equal.
Given this, it's not surprising to see the pound to euro exchange rate ease to 1.1517 in the minutes following the decision from 1.1531. The pound to dollar exchange rate drops to 1.3620 from 1.3650.
The losses aren't earth-shattering and fit in with the pre-decision analysis that we published this morning. To put it briefly, the expectation was for an approximate 0.20% drop in Sterling on an on-consensus outcome.
This is more or less what the Bank delivered, so the 'sell the fact' weakness in GBP is also expected.
However, it is no game-changer for Sterling, and there is scope for the currency to remain supported against both the euro and dollar over the coming days.
The big risks for pound sterling come in November, when the Bank actually delivers a cut and the Chancellor delivers her tax-hiking budget.
Given the proximity of the budget to the November decision, there is a decent chance the Bank skips a November cut in favour of a December move.
This would allow them to process the budget and ascertain whether there are any inflation-boosting developments, such as last year's national insurance increase that prompted businesses to raise prices.
"From a policy perspective, the Bank has maintained its gradual and cautious approach. There appears to be little risk of a change in November, ahead of the Budget, but we continue to see the possibility of an adjustment in December," says Jeremy Stretch, a strategist at CIBC Capital Markets.
Raja at Deutsche Bank says he says one more rate cut in Q4-2025 and two further rate cuts in 2026.
"We continue to see one more rate cut to end the year (December). And we continue to think that Bank Rate will settle closer to 3.25% ahead of next summer, but we see upside risks to our terminal rate projection. Where wage settlements and underlying inflationary pressures go over the coming months will be crucial in determining the Bank’s next steps," he explains.