Daily Market View 19-12-2025
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BoE Cuts as Expected, Suggesting Less Cuts to Come
GDP
We always expected the direction and size of the cut to come yesterday, after all, the market had it priced in by over 90% for two weeks ahead of the decision. But the statement was something of a surprise, with the Governor stating that the Bank of England was close to its neutral rate, which he estimated in the past to be in the 3%'s.
The Pound has managed to creep up against the Dollar and the Euro in the aftermath of the decision. I expected a bigger commitment to cuts next year, but with another vote share of 5-4, showing a large minority of MPC members still favouring higher rates, perhaps only 2 more cuts in this cycle is what is most likely. Good for the Pound perhaps, bad for the economy into next year.
This blog will be taking a break over the festive period, but will be back in the New Year. Until then, season’s greetings and best wishes for a happy and prosperous New Year from all us here at Caxton.
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