BoE: Bank rate could rise as high as 4.75% if global financial stability risks remain contained – Rabobank

FXStreet Insights Team FXStreet

The Bank of England raised its policy rate by 25 basis points to 4.25%. Economists at Rabobank belive that Bank rate could rise as high as 4.75% and forecast the next 25 bps hike in May.

Another 25 bps hike for the May meeting

“The BoE raised its policy rate by 25 bps to 4.25%. The vote was split 7-2-0, with external members Tenreyro and Dhingra voting for a hold.”

“It will tighten policy further in May if price pressures persist and credit conditions permit. The shift to a meeting-by-meeting approach is not as dovish as some expected.”

“The Financial Policy Committee has judged that the UK banking system remains resilient, effectively giving the green light to this rate increase.”

“For now, we hold on to our long-held view that Bank rate could rise as high as 4.75% with the next 25 bps hike in May. This requires that global financial stability risks remain contained.”

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD stays weak below 1.3250 on UK politics, PMIs eyed

GBP/USD loses ground below 1.3250 in the European session on Tuesday. Political uncertainty in the United Kingdom continues to weigh on the British Pound, while the US Dollar capitalizes on the risk-off mood and hawkish Fed bets. The UK and US S&P Global preliminary PMI data are next of note for the major.

EUR/USD keeps range above 1.1400 ahead of German/ Eurozone PMIs

EUR/USD remains stuck in a tight range above 1.1400 in Tuesday's European trading. The US Dollar holds the upper hand against the Euro amid risk-off sentiment and a hawkish Federal Reserve stance, leaving the pair on the defensive. Traders now await the preliminary readings of the Purchasing Managers Index from Germany, the Eurozone, and the United States later on Tuesday.

Gold drops to nearly two-week low, seems vulnerable amid Fed hike bets, bullish USD

Gold adds to its Asian session losses, and drops to a nearly two-week low, around the $4,115 region in the last hour amid a bullish US Dollar. Despite positive signals from US-Iran peace talks, widespread skepticism remains toward a final deal. This helps the USD in preserving its recent strong gains to the highest level since May 2025.

Bears cap Solana below $75 as ETF, retail demand wanes

Solana edges below $72 risking a third consecutive day of losses that could erase the 5% gains from Friday. SOL-focused Exchange Traded Funds reflect muted demand from institutional investors following a minor recovery last week. Meanwhile, retail trading activity hints at a bearish positional buildup.

Big day of PMIs ahead

In the euro area, June flash PMIs are released. Most respondents will likely have answered after the US-Iran deal, yet the impact of lower oil prices is unlikely to already show up in activity data. We expect manufacturing to edge down to 50.9 (May: 51.6), while we expect services to see a modest improvement to 48.8 (May: 47.7).

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.