HSBC says its economists expect further signs of disinflation to emerge alongside a cooling UK labour market, paving the way for the Bank of England to maintain a steady pace of 25-basis-point rate cuts each quarter until Bank Rate reaches 3.0% by the third quarter of 2026.
On the currency front, the bank forecasts sterling will soften against the euro as UK rates trend lower, but sees only limited downside versus the US dollar, which remains under pressure from ongoing policy uncertainty in Washington.
