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Asset Watch
Wednesday, 7th of May 2025
The Bank of England’s Monetary Policy Committee is scheduled to meet tomorrow to announce its interest rate decision, with markets widely expecting a 25-basis-point cut from 4.5% to 4.25%. Investors also anticipate that the central bank will continue to lower rates gradually through 2026, particularly amid ongoing uncertainty over new tariffs between the United States and the United Kingdom.
Future rate cuts are likely to follow a quarterly pace unless compelling data signals a sharp deterioration in the UK’s economic performance. In the short term, the impact of US tariffs is expected to be limited, given the relatively low volume of goods trade between the two nations. However, a slowdown in US economic growth could dampen demand for British services, potentially weighing on the UK economy.
UK inflation has eased from 3% at the beginning of the year to 2.6% in March, a trend likely to continue given falling energy prices. However, core inflation, particularly in the services sector, remains elevated at 4.7% (as of March). As a result, MPC members are likely to remain cautious, maintaining the current pace of rate cuts (once per quarter) until a clear and sustained decline in service-sector inflation is observed.
On April 9, the GBP/JPY pair tested multi-month lows at 184.36 before rebounding due to profit-taking. Prices have since started an upward trend, forming higher highs and higher lows. Earlier this month, the pair closed above the 50-day moving average, signalling growing bullish momentum, although it later pulled back slightly while remaining above this key indicator.
Currently, the pair appears poised to test the high end of the current trading zone located between 194.60 and 188.92. A daily close above 194.60 would signal an even stronger bullish momentum, potentially pushing the pair toward 198.16. In this case, resistance at 196.89 should be closely watched.
A daily close below the low end of the current trading zone at 188.92 would suggest a shift in sentiment and may trigger a bearish move towards 186.76. In that scenario, the support level at 186.76 should be monitored closely.
Chart Source: ADSS Platform
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