BoE Holds Rates as Markets Cautious Over Lingering Inflation Risks

The Bank of England is expected to maintain its interest rates at 3.75% on Thursday, according to economists at Natixis.

Natixis described the decision as 'status quo' while warning that 'near-term inflation risks linger', with UK inflation slowing to 2.6% in June but services inflation remaining above consensus at 3.6%.

The Pound Sterling edged lower against the Euro on Wednesday, positioning for Thursday's Bank of England decision, and Natixis noted that the Pound 'slightly underperformed'.

A statement from the Bank that stresses persistent inflation risks could preserve expectations of another increase later this year and offer some support to the Pound, while a more relaxed assessment would challenge those expectations and potentially leave it vulnerable, particularly against the Euro.