The Bank of England is projected to implement quarterly rate cuts until the third quarter of 2026. Rate reductions are expected to be 25 basis points each, bringing the Bank Rate down to 3.0% by that time.<\/p>\n
A cooling UK labour market and signs of disinflation could contribute to this trend. The pound is expected to weaken against the euro due to decreasing UK rates. However, its decline against the US dollar may be limited because of continued policy uncertainty in Washington.<\/p>\n
We see a clear path for the British Pound to weaken against both the Euro and the US Dollar. The Bank of England is expected to continue its cycle of rate cuts, with another one anticipated each quarter. The cut delivered last week, which brought the Bank Rate down to 4.75%, appears to be just the next step in a longer journey towards 3.0%.<\/p>\n
This view is strengthened by recent UK economic data, which points to persistent disinflation. The latest Office for National Statistics report for July 2025 showed headline CPI fell to 3.2%, a sharper drop than analysts had forecasted. A cooling labour market, with unemployment ticking up to 4.5%, gives the Bank of England the justification to continue easing policy.<\/p>\n
For derivative traders, the EUR\/GBP cross looks like the most straightforward way to position for a falling pound. The European Central Bank has held its own interest rates steady, citing stubborn services inflation, which creates a growing rate advantage for the Euro. Buying EUR\/GBP call options or selling GBP futures against the Euro are viable strategies for the coming weeks.<\/p>\n
The pound’s outlook against the US dollar is more nuanced, suggesting a more cautious approach is needed. Ongoing policy uncertainty in Washington ahead of the midterm elections is likely to put a ceiling on the dollar’s strength. Therefore, traders could consider using bear put spreads on GBP\/USD to limit risk while still positioning for a modest decline.<\/p>\n
This pattern is reminiscent of the BoE’s actions during the 2008-2009 financial crisis, when a series of rapid cuts led to sustained weakness in the pound. In the weeks ahead, any short-term strength or rally in sterling should be seen as an opportunity to enter new bearish positions. The fundamental downward pressure will likely build with each set of new economic figures.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Bank of England to cut rates quarterly until 2026; weaker pound expected amid disinflation and uncertainty.<\/p>\n","protected":false},"author":62,"featured_media":17030,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-28797","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/28797","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=28797"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/28797\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17030"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=28797"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=28797"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=28797"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}