The Bank of England (BOE) is expected to cut the bank rate by 25 basis points after keeping it at 4.25% in June. However, the voting patterns for this decision remain uncertain, even though markets predict a 93% chance of the cut. Analysts have various predictions for the voting outcomes, ranging from 2-4-3 to 0-9-0. In past meetings, some members wanted a 25 bps cut. Now, attention turns to who will vote for changes, as Dhingra and Taylor are expected to advocate for a 50 bps cut.

Potential Policymakers’ Arguments

Policymakers like Mann, Pill, and Greene may argue to keep the rate the same. While a rate cut is anticipated, future reductions will depend on upcoming data. Analysts expect cautious language in the BOE’s guidance, with the term “restrictive” likely to remain. Several large financial firms have different views: Barclays and JP Morgan predict a 2-5-2 vote with a terminal rate of 3.50% by 2026, HSBC sees a potential hawkish surprise, and BNP Paribas anticipates a 2-7-0 vote. Other firms, including Goldman Sachs and Deutsche, estimate terminal rates between 3.00% and 3.25% from early to mid-2026. With a 25 basis point rate cut almost certain today, our focus should be on the actual vote rather than the cut itself. The market has already factored in the cut, so traders will be looking for surprises in the Monetary Policy Committee’s vote split. This division will provide insights into the BOE’s future direction. If more members than expected choose to keep rates unchanged, perhaps a 2-5-2 split or three dissenters, we could see the pound strengthen. A hawkish surprise could push GBP/USD above the 1.30 mark it has been nearing recently. This would likely cause short-term interest rate futures to drop, as the market would have to reconsider bets on cuts in November. Conversely, if the outcome is more dovish, like two or three votes for a larger 50 basis point cut, the pound would likely decline. This scenario would show a committee keen on loosening policy, possibly pushing GBP/USD back towards the 1.28 support level. Such a vote could also strengthen expectations for another rate cut by year-end, impacting short-term interest rate derivatives.

Uncertainty Rooted in Economic Figures

This uncertainty stems from mixed economic data. While July 2025’s ONS data indicated that CPI inflation had fallen to 2.1%, annual wage growth remains stubbornly high at above 4.5%. This discrepancy creates room for disagreement, with some officials focused on meeting inflation targets and others concerned about underlying economic pressures. A similar volatility occurred in late 2021 and early 2022, as the market tried to gauge the Bank’s initial post-pandemic rate hikes. The unexpected hold in November 2021 and the subsequent hike in December highlight how divisions within the committee can create trading opportunities. Thus, implied volatility in sterling options is likely to stay high, as the future remains unclear. Besides the vote count, closely monitor the forward guidance for any changes in tone. The key question is whether the statement still describes the policy as “restrictive.” Removing that term would signal a dovish shift, indicating a quicker path to lower rates, regardless of how the votes fall. Create your live VT Markets account and start trading now.

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