The Bank of England (BoE) is expected to leave interest rates unchanged in June, but the pound could still move sharply if the bank’s guidance shifts market expectations for UK interest rates.
A cautious tone from the BoE could pressure Sterling, while signs that future rate hikes remain possible could support GBP. The pound may also be affected by UK GDP, inflation and jobs data, as well as the Makerfield by-election.
When is the next BoE interest rate decision?
The next Bank of England decision is due to be announced Thursday 18 June at 12:00 BST. The bank will also publish its monetary policy statement and the meeting minutes, after which there will be a press conference.
Will the BoE raise interest rates in June?
The Bank of England is broadly expected to leave interest rates unchanged in June. However, markets will be looking at the BoE’s forward guidance and the vote split among policymakers for signals around the future path of UK interest rates.
What could the BoE decision mean for the pound?
The impact of the BoE decision on the pound will likely depend less on whether interest rates are left unchanged and more on how cautious or hawkish the bank sounds about the future path of monetary policy.
We currently expect the BoE to maintain its recent cautious stance, which could put pressure on GBP. However, upcoming UK economic data and developments in the Middle East could alter the bank’s tone.
Recently, BoE Governor Andrew Bailey pushed back against rate hike bets, saying the bank was open to ‘tolerating temporarily above-target inflation to provide some support for the real economy’.
Inflation eased to 2.8% in April, its lowest level since March 2025, although it remains above the BoE’s 2% target. While the bank expects inflation to accelerate this year due to the surge in energy prices caused by the US-Iran war, some policymakers may be reluctant to raise interest rates unless there are signs of more persistent underlying price pressures, particularly given concerns about the UK’s fragile economy.
If this remains the BoE’s message at its June meeting, Sterling could stumble.
However, expectations could shift in the run-up to the decision. The UK’s latest GDP figures, consumer price index and employment report are all due before the meeting, and each release could influence how markets assess the likely path for UK interest rates.
Meanwhile, the conflict in the Middle East adds another layer of uncertainty. Progress towards a peace deal could see oil prices retreat, giving the BoE more room to remain cautious. Conversely, escalating tensions and rising energy prices could increase pressure on policymakers to adopt a more hawkish tone.
For a longer-term look at the outlook for Sterling, read our guide: Will the pound get stronger in 2026?
Pound to euro forecast: Could GBP/EUR rise or fall after the BoE decision?
The pound to euro exchange rate could weaken if the BoE leaves interest rates unchanged and maintains a cautious tone on future monetary policy.
While the European Central Bank (ECB) is expected to raise interest rates at its June meeting, the Bank of England appears more reluctant to tighten policy further unless there are clearer signs of persistent underlying inflation pressures. Although the BoE Bank Rate currently sits above the ECB’s key deposit rate, UK monetary policy is already relatively restrictive, which may make policymakers wary of raising rates again unless upcoming data forces their hand.
This divergence could weigh on GBP/EUR, particularly if the ECB signals that additional rate hikes may be needed while the BoE continues to stress risks to the UK economy. As a result, GBP/EUR could fall if the BoE delivers a cautious hold and the ECB maintains a hawkish stance.
However, the pound could prove more resilient if UK inflation rises more sharply than expected before the BoE decision, or if the bank signals that future rate hikes remain possible. GBP/EUR could also recover if the ECB’s June rate hike is accompanied by cautious guidance.
Pound to dollar forecast: How could GBP/USD react to the BoE decision?
The pound to dollar exchange rate could fall if the BoE leaves interest rates unchanged and maintains a cautious tone, although developments in the Middle East could overshadow the bank’s policy decision.
While markets have recently trimmed their bets on BoE rate hikes this year, investors are increasingly expecting the Federal Reserve to tighten policy. The latest US non-farm payrolls report smashed forecasts, while upcoming inflation data is expected to show rising price pressures in the US.
These shifting policy expectations could weigh on GBP/USD if the BoE delivers a cautious hold, especially if policymakers continue to suggest they are willing to tolerate temporarily above-target inflation in order to support the UK economy.
However, the pound could strengthen against the dollar if the BoE strikes a more hawkish tone than expected, particularly if upcoming UK inflation or employment data raises the prospect of future rate hikes.
Geopolitical developments in the Middle East could also influence GBP/USD, potentially injecting volatility into the currency pair. If tensions escalate, safe-haven demand may lift the US dollar and pressure the pound to dollar exchange rate. But if progress towards a peace deal reduces demand for the dollar, GBP/USD could strengthen, even if the BoE decision acts as a headwind.
What UK economic data could impact the pound before the BoE meeting?
The UK’s latest GDP, inflation and employment data could influence the pound ahead of the BoE decision, while also shaping the bank’s policy guidance.
The first key release is the UK’s April GDP data, due to be published on Friday 12 June. Markets currently expect the British economy to have contracted 0.1% in April, which could pressure the pound and raise concerns among BoE policymakers about UK growth risks.
On Wednesday 17 June, the focus shifts to the UK consumer price index for May. Current forecasts see UK inflation rising from 2.8% to 3.1% last month. If the CPI shows a steeper rise, Sterling could strengthen as markets bet on a more hawkish approach from the BoE.
Finally, the UK employment report is due on the morning of Thursday 18 June, the day of the BoE decision. Any signs of weakness in the labour market may pressure the pound, while signs of resilience could lift GBP.
What else could affect the pound in June?
On 18 June – the same day as the Bank of England decision – voters in Makerfield, Greater Manchester, will head to the polls in a by-election that could lead to Prime Minister Keir Starmer facing a leadership challenge.
As a result, the pound could face additional volatility around the by-election, with investors keeping an eye on how the UK bond market responds to political developments.
Stay up to date with the latest rate movements
With the BoE decision, key UK data and political uncertainty likely to drive GBP volatility in June, keeping track of the latest market movements can help you plan your international transfers with more confidence.
A free Currencies Direct account gives you access to daily market updates, live exchange rates and rate alerts, with no obligation to make a transfer. You can also speak to your dedicated account manager for guidance on your currency options.
BoE interest rate decision FAQs
What time is the Bank of England interest rate decision?
The Bank of England interest rate decision is due at 12:00 BST on Thursday 18 June. The bank will also publish its monetary policy statement and meeting minutes, which should provide more detail on the thinking behind the decision.
How often does the Bank of England make interest rate decisions?
The Bank of England usually announces eight interest rate decisions each year. These meetings allow policymakers to assess inflation, economic growth, employment conditions and other factors affecting UK monetary policy.
What is the current Bank of England rate?
The current Bank of England Bank Rate is 3.75%. This is the benchmark interest rate set by the BoE’s Monetary Policy Committee and is used to guide borrowing costs across the UK economy.
Who decides UK interest rates?
UK interest rates are set by the Bank of England’s Monetary Policy Committee. The MPC has nine members, who vote on whether to raise, cut or leave interest rates unchanged.
Why is the BoE vote split important for the pound?
The BoE vote split can influence the pound because it shows how divided policymakers are. A larger number of votes for a rate hike could support Sterling, while more support for caution could weigh on GBP.
What economic data does the Bank of England look at?
The Bank of England looks at a range of UK economic data, including inflation, wage growth, employment, GDP, consumer spending and business activity. Inflation and wage data are often especially important because they can signal whether price pressures are becoming more persistent.
How do higher UK interest rates affect the pound?
Higher UK interest rates can support the pound because they may make Sterling-denominated assets more attractive to investors. However, the impact also depends on whether higher rates damage growth expectations or are already priced in by markets.
Why could the pound move if the BoE leaves interest rates unchanged?
The pound could still move if the BoE leaves rates unchanged because markets react to forward guidance, the vote split and comments from policymakers. If the bank sounds more hawkish or cautious than expected, GBP exchange rates may shift even without a rate change.
What should GBP investors watch after the BoE decision?
After the BoE decision, GBP investors may focus on the meeting minutes, the vote split, comments from Governor Andrew Bailey and any changes in market expectations for future UK interest rates. Broader factors, including UK political developments, Fed expectations and Middle East tensions, may also influence the pound.
