• The UK central bank is expected to keep its policy rate unchanged at 5.25%.
• The Bank of England is seen reducing its rates earlier than estimated after softer-than-expected inflation data.  
• GBP/USD will closely follow the BoE’s decision as well as the Minutes.   

The Bank of England (BoE) is set to hold its policy rate for a fifth meeting in a row on Thursday amidst some recent pick-up in speculation over interest rate cuts by the central bank.

Bank of England predicted keeping the “wait-and-see” mode

The Bank of England is expected to leave the benchmark interest rate unchanged at 5.25% following its policy meeting on Thursday at 12:00 GMT. The bank’s decision on the policy rate will come in tandem with the release of the Monetary Policy Minutes.

While market participants originally expected the BoE to lag both the Federal Reserve (Fed) and the European Central Bank (ECB) in kick-starting their easing cycles, the persistent disinflationary pressures not only accelerated in the UK in February, but also seem to have now underpinned the view of an earlier commencement of the interest rate reductions.

Speaking about inflation, the headline Consumer Price Index (CPI) in the UK rose by 3.4% in the year to February and 4.5% when it came to the Core CPI, that is, excluding food and energy costs