What's priced in ahead of the BOE and ECB meeting decisions later today?

BOE Rate Cut Predictions

The BOE is set to announce its policy decision at 1200 GMT, with a 25 basis points cut widely expected. This would lower the bank rate from 4.00% to 3.75%, but the voting outcome is anticipated to be close, possibly a 5-4 split influenced by BOE Governor Andrew Bailey. Currently, traders are pricing in about a 98% chance of the rate cut, raising significant risks for the pound. A surprise decision could drastically affect not only the pound but also the gilt market. Looking ahead, traders expect around 68 basis points of cuts through to the end of 2026, with the next anticipated cut in April 2026.

ECB's Standstill

In contrast, the ECB's decision is expected at 1315 GMT and appears more straightforward. The central bank is seen as remaining on the sidelines, with no major surprises in the recent developments to change this outlook. There’s approximately a 98% likelihood of no change in rates at this meeting, with no further cuts projected for 2026 either. The ECB faces challenges in signaling the potential for further rate cuts, especially amid persistent inflation in Germany. Hence, traders should stay alert for any unexpected developments.