Sterling volatile ahead of Bank of England rate decision

The Bank of England's Monetary Policy Committee is set to announce its latest interest rate decision on at 12pm (GMT) today.

The Bank of England will also announce its latest Monetary Policy Report, which will include updated growth and inflation forecasts. The vast majority of investment banks anticipate a rate cut at this meeting, with markets now pricing in a 60% chance of such a move, up from about 50% last week.

Currency markets and banks are predicting a very close decision this time, with most analysts anticipating a 5 to 4 voting split. Hawkish members like Haskel and Mann are unlikely to vote for a rate cut, while Dhingra and Ramsden are expected to advocate for reducing borrowing costs.

The outcome will, therefore, hinge on the centrist members of the committee. There is significant uncertainty regarding their votes, especially since this will be Lombardelli's first meeting.

Here are the comments from various banks:

• Barclays: Anticipates a 25 basis point cut with a 5-4 vote split.
• Bank of America: Also expects a 25 basis point cut with a 5-4 vote split.
• Credit Agricole: Fully pricing in two rate cuts this year and four rate cuts over the next 12 months.
• UniCredit: Expects rates to remain unchanged at this meeting but forecasts a 25 basis point cut in September, with a total of 75 basis points in cuts this year and 175 basis points in cuts next year.

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