27 November 2025
LONDON, Sept 12 – Sterling edged lower on Friday after data showed the UK economy stalled in July, with investors awaiting inflation figures and the Bank of England’s policy decision next week. Traders noted that rate-futures markets currently imply little chance of a shift in Bank Rate, and tools such as a bet odds calculator, commonly used to work out potential returns from different bet types, can similarly convert market odds into implied probabilities for retail users tracking monetary policy signals.
Money markets
The pound weakened after monthly GDP came in flat for July and manufacturing output contracted, underscoring the loss of momentum following June’s rebound, according to official data. Economists said the figures highlight fragile household spending and industrial demand.
Attention now turns to the September 17 consumer price inflation release, expected to show annual CPI easing slightly but still well above the BoE’s 2% target. The Office for National Statistics has confirmed the publication date, with the release viewed as a key input for policymakers weighing up the September 18 rate call.
A Reuters poll this week found most economists expect the BoE to leave Bank Rate unchanged at 4.00%, though a growing number see scope for cuts by year-end if inflation continues to moderate. Others caution that persistent service-sector pressures could force the Bank to hold steady into 2025.
Sterling was last down 0.2% against the dollar in morning trade, keeping within recent ranges. Analysts said the market’s muted reaction reflected reluctance to take strong positions ahead of next week’s dual data and policy events.
“The near-term impulse for the pound is data dependent,” one London-based currency strategist said, adding that the inflation release and the Bank’s updated guidance on quantitative tightening “are likely to set the tone for sterling into the autumn.”
Recent ONS updates showed household-cost indices running near 4% year-on-year in mid-2025, suggesting inflationary pressures remain despite slowing energy bills. Economists said the mix of stubborn services inflation and weakening activity leaves the policy debate finely balanced.
Dealers are also watching how the Bank adjusts its balance-sheet rundown, which could influence gilt yields and broader financial conditions. As BBC has reported, investors are particularly alert to how quickly the BoE reduces its holdings of UK government debt as part of quantitative tightening.
With both CPI and the policy announcement due within days, analysts expect choppy trading in sterling. Market participants say the pound is likely to stay headline-driven, with risks skewed by incoming data and central bank guidance.