6 min read The Bank of England (BoE) hasn’t raised interest rates since August 2023, and that could change on Thursday, 5 November at 12:00 UTC. Economists polled by Reuters expect Bank Rate, its main interest rate, to rise from 3.75% to 4%. Traders have almost fully priced that in, so the rise alone may not do much for the pound. What the BoE says about 2027 could matter more.
Why a rate rise looks likely
Inflation is the main reason. UK Consumer Price Index (CPI) inflation rose to 3.5% in September from 3.1% in August, above the 3.4% economists expected, the 3% the BoE forecast in July and its 2% target. Fuel prices, up almost 30% in a year because of the Iran war, were the biggest driver. In September, the BoE said inflation could reach slightly above 4% in early 2027.
New BoE forecasts arrive on Thursday.
Why the BoE may not wait
A rate rise can’t bring down the price of oil. What the BoE wants to prevent is second round effects, where workers demand higher pay and firms raise prices, so inflation stays high after the energy shock fades. Its September minutes found “little evidence” of this so far. But BoE research published in July found that once inflation passes about 3% to 3.5%, a rise in oil prices has more than twice the usual effect on inflation. At 3.5%, the UK is already in that range.
Why the vote matters
The nine member Monetary Policy Committee (MPC) voted 6 to 3 to hold in September. A rise needs two more votes, but the Reuters poll points to 7 to 2, with Alan Taylor and Swati Dhingra the most likely to vote against. A closer vote could suggest less support for further rises.
Where markets and economists disagree
Markets are pricing three to four more rises of 0.25 percentage points in 2027, which would take Bank Rate to between 4.75% and 5%. Economists are more cautious, and Reuters’ October poll found no majority for any rise after November.
Markets expect several more rises in 2027. Many forecasters expect one.
The BoE’s new forecasts could give a clue. They usually assume rates follow market pricing, so inflation falling below 2% in two or three years could suggest markets expect too many rises.
How the pound could react
With a rise already expected, GBP/USD may react more to what comes next:
- More rises signalled: a 7 to 2 vote or stronger, and a message that more rises are likely. The pound could find support.
- As expected: a 7 to 2 vote and no clear message. Any move may fade as attention turns to Bailey’s press conference at 12:30 UTC.
- Caution on further rises: a closer vote, or a warning that markets expect too much. The pound could fall even if rates go up.
Friday’s US jobs report could also move the dollar and outweigh Thursday’s reaction.
GBP/USD technical picture
Since May 2025, GBP/USD has moved in clear cycles from low to low, lasting 59, 72, 97, 61 and 74 trading days. Every cycle has ended in or just below the support band between 1.318 and 1.328, apart from the late 2025 cycle, which bottomed near 1.30. The lengths run in groups of three, with the third the longest. If that rhythm repeats, the cycle that began at the 14 October low near 1.316 could last about 99 bars, with the next low due in early March 2027.
The blue channel and arc show the projected path for the current cycle.
Price is only about 13 bars into the new cycle, usually the phase with the strongest upward momentum. The last two cycles rose 470 to 480 pips (a pip is 0.0001) from low to peak, and the last rise took 42 bars. A repeat could put the peak in the red box at 1.362 to 1.367, the bottom of the resistance band, around 11 December. That’s before the midpoint of a 99 bar cycle, which cycle analysts call left translation. It usually means a longer decline afterwards, which fits a return to the support band by March.
- Bullish case: a BoE that signals more rises could speed the move up the blue channel towards 1.362 to 1.367. Only a daily close above 1.375, the top of the resistance band, would break the pattern of lower highs since February.
- Bearish case: a pullback to the channel’s lower line and the swing low at 1.3340 would be normal in a rising phase. A daily close below 1.3340 would suggest the peak came early, and point to the support band well before March.
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