GBP/USD drifts lower on October CPI, BoE easing expectations – BBH

FXStreetNov 19, 2025 11:23 AM

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GBP/USD is edging lower as October UK CPI data leave room for the Bank of England to resume easing at its December 18 meeting, BBH FX analysts report.

UK inflation data supports potential December rate cut

"GBP/USD is drifting lower. UK October CPI leaves room for the Bank of England (BOE) to resume easing at its next December 18 meeting. Headline CPI printed at 3.6% y/y vs. 3.8% in September (consensus: 3.5%, BOE forecast: 3.6%), core CPI inflation eased in line with consensus to 3.4% y/y vs. 3.5% in August, and the policy-relevant services CPI inflation cooled more than expected to a ten-month low at 4.5% y/y (consensus: 4.6%) vs. 4.7% in September."

"The swaps market raised odds of a December rate cut to 88% from 80% yesterday. Over the next 12 months, the swaps curve implies 60bps of easing and the policy rate to bottom between 3.25%-3.50%. The expected fiscal drag from the UK budget (scheduled for November 26) opens the door for looser BOE policy settings. As such, we expect GBP to keep underperforming on the crosses."

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