13:00 CET, United Kingdom, interest rate decision: 3.75% (expected: 3.75%, previous: 3.75%).
The Bank of England's MPC voted 7–2 to maintain interest rates at 3.75%, with two hawkish dissenters pushing for a 25 bps hike. While headline CPI fell to 2.8%, the Committee warned inflation will likely rise later this year due to volatile energy markets and potential second-round wage-setting effects.
Source: XTB Research
Hawkish Middle East Premium
The Bank of England notes that while recent Middle East peace plans have lowered oil and gas prices, energy markets remain highly volatile and elevated above pre-conflict levels. The Committee warns that previous mitigants—like strategic reserve releases and reduced Asian demand—may only temporarily buffer supply disruptions. Furthermore, sustained high energy costs are fueling broader commodity price increases and causing significant global supply chain disruptions. Traders have tempered their expectations for 2026 interest rate hikes to 32 basis points, maintaining a bias toward a September start while ensuring a hike is fully priced by November.
The hawkish vote split helped the 2-year bond yield spread between the UK and the US recover back into positive teoritory, though the overall drastic change of the differential from May or even early July levels still motivates the weakness in the GBPUSD. Source: XTB Research
Technical Analysis: GBPUSD (D1)
The GBPUSD pair is currently under significant bearish pressure, marked by a sharp breakdown below key exponential moving averages (EMA 10, 30, and 100). This breach indicates a loss of intermediate-term bullish momentum and a shift in market sentiment. Furthermore, the Relative Strength Index (RSI) is hovering just above the 30 level, signaling that the asset is nearing oversold territory. Investors should monitor this level closely, as a sustained move below 30 could suggest continued selling exhaustion.
Source: xStation5
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