The Bank of England (BoE) left its benchmark interest rate unchanged at 4%, following the conclusion of the September monetary policy meeting on Thursday.
The rate decision aligned with the market expectations.
The voting composition showed the expected 7-2 split on the Monetary Policy Committee (MPC), with two members, Dhingra and Taylor, voting in favor of a 25 basis points (bps) cut.
Follow our live coverage of the BoE policy announcements and the market reaction.
Key takeaways from BoE Monetary Policy Statement
BoE policymaker Pill voted to maintain QT pace at 100 bln Pound Sterling (stg).
BoE policymakers vote 7-2 to slow quantitative tightening pace to 70 bln stg a year from 100 bln stg.
BoE policymaker Mann voted to slow QT pace to 62 bln stg.
To hold two 775 mln stg short-dated gilt auctions, two 750 mln stg medium-dated gilt auctions and one 550 mln stg long-dated gilts auction in Q4 2025.
2025/26 gilt sales will be split 40:40:20 between short-, medium- and long-maturity buckets in initial proceed terms (2024/25 had equal split)
“We’re not out of the woods yet so any future rate cuts will need to be made gradually and carefully”
New AT target means MPC can continue to reduce size of balance sheet while continuing to minimise impact on gilt market
“A gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate”.
Keeps phrase: monetary policy not on pre-set path.
UK CPI forecast to peak at 4% in September 2025 (August forecast to peak at 4% in Sept).
Staff forecast Q3 GDP to increase by around 0.4% QoQ (August forecast: Q3 +0.3%).
Rise in firms’ social security contributions appears to be delaying the reduction in total labour costs growth until 2026.
Impact of US tariff rates on the world economy could be slower, not smaller than previously thought.
Market reaction to BoE policy decision
GBP/USD loses its recovery momentum with the immediate reaction and was last seen trading modestly flat on the day at 1.3626.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | 0.11% | 0.28% | 0.00% | 0.02% | 0.98% | -0.05% | |
| EUR | 0.12% | 0.10% | 0.40% | 0.14% | 0.12% | 1.21% | 0.10% | |
| GBP | -0.11% | -0.10% | 0.28% | 0.03% | 0.00% | 1.03% | -0.00% | |
| JPY | -0.28% | -0.40% | -0.28% | -0.28% | -0.32% | 0.68% | -0.29% | |
| CAD | -0.01% | -0.14% | -0.03% | 0.28% | 0.00% | 1.13% | -0.04% | |
| AUD | -0.02% | -0.12% | -0.00% | 0.32% | -0.00% | 1.12% | -0.02% | |
| NZD | -0.98% | -1.21% | -1.03% | -0.68% | -1.13% | -1.12% | -1.01% | |
| CHF | 0.05% | -0.10% | 0.00% | 0.29% | 0.04% | 0.02% | 1.01% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
This section below was published as a preview of the Bank of England’s (BoE) interest rate decision at 06:00 GMT.
- The Bank of England is set to hold the benchmark interest rate at 4.0% on Thursday, following the August cut.
- The United Kingdom’s annual CPI inflation held in August at the highest level since January 2024.
- The Pound Sterling could experience intense volatility on BoE monetary policy announcements.
After delivering a 25 basis points (bps) interest rate cut to 4% in August, the Bank of England (BoE) is widely expected to stand pat following the conclusion of the September monetary policy meeting. The Monetary Policy Committee (MPC) policymakers are seen voting 7-2 to keep rates on hold.
Thursday’s meeting is not a “Super Thursday” – there won’t be any Monetary Policy Report (MPR) or a press conference from Governor Andrew Bailey – but the United Kingdom (UK) central bank’s policy announcements at 11:00 GMT are likely to inject massive volatility in the Pound Sterling (GBP).
What to expect from the Bank of England policy announcements?
With a steady rate decision fully baked in, the key focus will likely remain on any tweaks to the policy statement and a potential split in the MPC voting composition.
At its August monetary policy meeting, the BoE lowered the benchmark rate to 4%, but after an unprecedented second round of voting that ended with a 5-4 split in favor of such a move.
The central bank repeated its guidance about “a gradual and careful approach” to further cuts in borrowing costs but added that “the restrictiveness of monetary policy had fallen as Bank Rate had been reduced.”
A strong majority of the economists polled by Reuters pencilled in a 25 bps cut next quarter, with increased bets that it will happen in November. Slowing services inflation and jobs growth in the UK could persuade the BoE to hint at a rate cut in November.
However, with Britain having the highest inflation rate in the Group of Seven (G7) advanced economies, the central bank could very well stick to its cautious rhetoric on further policy easing,
The UK’s Office for National Statistics (ONS) showed on Wednesday that the annual Consumer Price Index (CPI) rose by 3.8% in August, missing the estimates for a 3.9% growth. The reading stayed at the highest level since January 2024 and was well above the Bank of England’s 2% inflation target. However, services inflation declined to 4.7% in August from July’s 5%.
Meanwhile, the UK labor data published on Tuesday highlighted that the annual growth in Average Earnings Excluding Bonus slowed to 4.8% in the three months to July from 5% previously, while the Unemployment Rate remained unchanged at 4.7%, both readings matching the analysts’ estimates.
Previewing the BoE monetary policy decision, Societe Generale said in a research note: “On Thursday, the Bank of England is widely expected to keep the policy rate on hold at 4.00% and reiterate its guidance for ‘a gradual and careful approach’ to further rate cuts. We see a vote split of 7-2 in favor of steady rates, with the dissenters supporting a 25 bps cut (Taylor and Dhingra).”
“The BoE will also announce the pace at which it will shrink its bond holdings over the next 12 months. Market participants estimate the new gilt runoff pace to slow from currently £100bn (between October 2024 and September 2025) to £60bn-£75bn (between October 2025 and September 2026),” analysts at Societe Generale added.
How will the BoE interest rate decision impact GBP/USD?
The GBP consolidates near two-month highs below 1.3700 against the US Dollar (USD). Will the BoE’s monetary policy outcome revive the GBP/USD uptrend?
If the monetary policy statement reemphasizes the bank’s prudence on further rate cuts, markets would read that as a hawkish hold, which could provide an extra boost to the Pound Sterling’s upbeat momentum. In such a case, GBP/USD could extend the uptrend toward the 1.3900 mark.
Contrarily, the GBP could witness a fresh sell-off, initiating a GBP/USD correction should the central bank express concerns over the economic prospects amid potential upside risks to inflation and cooling labor market conditions. This scenario could seal in a November rate cut, dragging the pair back toward 1.3500.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for GBP/USD:
“The GBP/USD pair remains in a correction phase from over two-month highs of 1.3726 early Thursday. The 14-day Relative Strength Index (RSI) remains comfortably above the 50 level, currently near 60.40, suggesting that upside risks remain intact in the near term.”
“Buyers, however, need to see acceptance above the 1.3700 psychological level for a sustained uptrend. The next topside barriers are seen at the previous day’s high of 1.3726 and the July high of 1.3789. On the downside, the 1.3550 mark could offer immediate support. Further south, the 21-day Simple Moving Average (SMA) at 1.3520 will come to the rescue of Pound Sterling buyers. A deeper decline could threaten the confluence support of the 50-and the 100-day SMAs at around 1.3475.”, Dhwani adds.
Source: https://www.fxstreet.com/news/boe-likely-to-pause-interest-rates-after-august-cut-to-4-202509180815