Bank of England’s June 2025 interest rate decision in focus: Will June bring a cut or a hold?

On Thursday, June 18th, 2025, the Bank of England (BoE) is scheduled to make its interest rate announcement. As investors predict whether the central bank will stick with its current policy rate of 4.25% or signal the beginning of a lowering cycle. While inflation has eased from its highs, policymakers remain cautious, with wage growth and services inflation still running hot.
 

Fresh CPI data offers little relief

New CPI data released on Wednesday morning shows that UK inflation slowed to 3.4% in May, slightly below the prior reading of 3.5% but still higher than the 3.3% expected by economists. The marginal improvement suggests that inflation is cooling, but not as quickly as hoped, complicating the BoE's efforts to justify a near-term rate cut.
Markets have been hoping for a more dramatic decline that would boost the bank's confidence in easing policy, but the persistence of inflation, particularly in core and services components, would make it more compelling to remain steady for a little while longer.
 

Economic landscape: A mixed bag

While headline inflation is moving in the right direction, the BoE remains focused on broader price pressures. Services inflation and strong wage growth remain elevated, posing a challenge to the bank's 2% target. Governor Andrew Bailey has emphasized the need for more sustained evidence that inflationary pressures are easing before making a move.
The Monetary Policy Committee (MPC) has so far resisted market pressure to start easing, choosing to exercise prudence while keeping an eye on new data.
 

Market sentiment and expectations

At the start of the year, many investors were pricing in a June cut. However, those expectations have faded as recent data, including today’s CPI release, has come in just hot enough to delay action. According analysts, the BoE is now expected to hold rates at 4.25%, with the focus shifting to August as the most likely window for the first cut.
The tone of Thursday’s statement and the MPC vote breakdown will provide critical insight into whether easing is imminent or still several months away.

Technical outlook: GBP/USD nears key decision zone

Figure 1.1: GBPUSD (daily timeframe) TradingView chart

From a technical perspective, GBP/USD is consolidating just beneath a long-standing supply zone that originated in January 2022, now acting as major resistance around the 1.3570–1.3750 region. Price action has respected an ascending trendline since January 2025, highlighting a bullish structure despite recent sideways movement.
The RSI currently sits near 49, reflecting neutral momentum as traders await the BoE decision. According to analysts, a breakout above the supply zone could trigger bullish continuation, while a break below the trendline may signal weakness if the BoE delays cuts or adopts a hawkish tone.
 

BoE’s balancing act: Inflation vs. growth

The central bank’s challenge lies in managing both inflation and a weakening economy. Business investment and consumer demand are showing signs of stress under high borrowing costs. Some sectors are already slowing, sparking concerns that tight policy may begin to choke off broader growth.
The BoE must strike a delicate balance; cutting too early could reignite inflation, while delaying too long could risk tipping the economy into stagnation.
What to watch for in the Bank of England interest rate decision
Key areas for markets include:

• The MPC vote split, which may hint at how close the committee is to its first rate cut.
• Forward guidance, particularly language around the inflation path and economic risks.
• GBP performance, especially against the USD. A dovish surprise could weaken the pound, while a hawkish hold may offer temporary support.

While a rate cut this month remains unlikely, today’s CPI reading reinforces the complexity of the BoE’s position. Inflation is easing, but not fast enough to trigger immediate action. Thursday’s decision and commentary will shape expectations for the second half of 2025, as the BoE balances price stability with mounting growth risks.