BoE: Expected to on prolonged hold – Societe Generale

💡 DMK Insight

The BoE’s decision to hold rates at 3.75% signals stability, but geopolitical tensions could change that. For traders, this means the GBP might see limited volatility in the short term, but any escalation in the US-Iran conflict could trigger a shift. If rates remain unchanged through 2026, as projected, it could lead to a stronger GBP against currencies like the USD, especially if the Fed maintains its current stance. Watch for any shifts in market sentiment around geopolitical news, as that could lead to sudden moves. Also, keep an eye on the 3.75% level; if the BoE hints at future hikes, expect GBP volatility to increase significantly. The real story is how external factors could force the BoE to pivot, which would impact not just GBP but also related assets like UK bonds and equities. Traders should monitor the MPC’s upcoming meetings for any hints of rate changes, especially if global tensions escalate.