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The Bank of England's (BoE) Monetary Policy Committee (MPC) meeting on Thursday, August 7, 2025, is an important moment for the UK economy. Everyone is watching closely for the BoE's decision on interest rates and updated economic forecasts.

The current Bank Rate is 4.25%, after cuts in February and May 2025. Most analysts and market predictions expect a 0.25% cut, bringing the rate down to 4.00%. This move would show the BoE continuing to take a more supportive approach to help the UK economy adjust to current challenges including the labor market.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar

When it comes to the vote split, i do expect seven members to vote for a 0.25% rate cut, with one member possibly disagreeing (either wanting no change or a 0.5% cut). However, this vote split isn’t a strong indicator of future decisions, even though markets often react to it on the day.

What are the Key Concerns for the Bank of England (BoE) Moving Forward?

Labor Market

The labour market has shown signs of cooling. The number of employees on payroll has dropped in seven of the last eight months. The unemployment rate has gone up slightly this year, and the data now seems more reliable than in past years. Job vacancy data from Indeed shows that the UK job market has slowed down more than other major economies.

Source: ING

Slowing Economic Growth

Economic growth has been weaker than expected since the June MPC meeting. The economy shrank by 0.3% in April and 0.1% in May, falling short of the BoE's Q2 growth forecast of 0.25%. The UK economy is struggling with slow growth, a weak housing market, and declining business confidence.

These poor growth numbers are the main reason for the BoE's expected rate cuts, as they pose a bigger risk to stability than high inflation. This shows the Bank is shifting its focus to supporting the economy, even with inflation above target.

Sticky Inflation Keeps the BoE Careful

Inflation remains a key concern despite recent declines. In June 2025, headline inflation (CPI) rose to 3.6%, up from 3.4% in May, staying well above the BoE's 2% target. Core CPI also increased to 3.7%, and services inflation stayed high at 4.7%, reflecting strong domestic price pressures.

Food prices, higher wages, and rising labor costs are driving inflation. The BoE is particularly cautious when CPI is between 3.5% and 4%, as it risks becoming long-term. Inflation is expected to average 3.4% in 2025, drop to 2.6% in 2026, and hit the 2% target in late 2026.

Services inflation is slow to improve due to factors like annual price setting in April, meaning noticeable changes may not appear until next spring. This delay forces the BoE to take a careful approach to rate cuts, avoiding moves that could reignite inflation before these pressures ease.

Source: Created by Zain Vawda, Google Gemini

Outlook Moving Forward: The Path of Monetary Policy

If we do get a rate cut tomorrow, analysts predict the Bank of England (BoE) will continue with gradual 0.25% cuts every quarter. Markets expect one final cut in November 2025, bringing the rate to 3.75%. Some forecasts, like Danske Bank, predict further cuts into 2026, lowering rates to 2.75%, while others, like the OECD, expect rates to settle at 3.5% by 2026. The BoE has hinted at more cuts if conditions remain stable but hasn’t specified details.

The BoE’s easing contrasts with the US Federal Reserve’s cautious approach, as the Fed held rates steady at 4.25%-4.50% in July due to inflation risks. However, last week's jobs data has significantly changed the outlook for the Federal Reserve moving forward.

The BoE’s rate cuts face risks, including inflation staying above target longer than expected, the impact of past rate hikes as households refinance mortgages, and tighter government budgets.

Global challenges, like US tariffs and geopolitical instability, add further pressure. These factors mean the BoE will likely take a slow and cautious approach to rate cuts, extending into 2026, as the economic outlook remains uncertain.

Technical Analysis - GBP/USD

From a technical standpoint, GBP/USD has arrested its recent slide which coincided with US Dollar weakness.

The selloff which reached a low of 1.3141 last week before recovery still may have further legs.

A rate cut by the BoE has probably been priced in which means the actual rate decision may do little to move GBP/USD tomorrow.

However, if Governor Bailey issues any hawkish remarks, this could help edge GBP/USD lower toward last week lows.

Only a daily candle close above the swing high at 1.3585 will invalidate the bearish setup and may be a sign that momentum is shifting.

Heading into tomorrow, immediate resistance rests at 1.3378 before the 1.3500 handle comes into focus. On the downside, last week's lows at 1.3141 may provide support with a break below opening up a retest of the key pivot level at 1.3000.

GBP/USD Daily Chart, August 6, 2025

Source: TradingView.com (click to enlarge)

This week is full of data for the Antipodeans and fro now, a combination of decent to positive Chinese and Australian data are providing boosts to both the New Zealand Dollar and the Australian Dollar.

The Employment rate for NZ came exactly in line and following consecutive beats for Australian and Chinese PMIs, the export-reliant economies are seeing a revamped economic outlook and this is helping commodities like Oil to reverse some of its downward movement.

In the meanwhile, let's take a look at multiple timeframe charts for the Aussie as it leads the Forex board in today's session.

Tonight will see the release of Australian trade balance data at 21:30 ET (expected at 3,250M) and next week (August 12) will see the release of the upcoming Royal Bank of Australia rate decision, with a 99% chance of a cut priced into Markets.

AUDUSD Multi-timeframe Analysis

AUDUSD Daily Chart

AUDUSD Daily Chart, August 6, 2025 – Source: TradingView

The Aussie is sending mixed signals in Markets between the break of its April ascending channel and the ongoing rally since its lows.

RSI Momentum has came back from bearish territory into neutral levels, pointing to more balanced price action.

The ongoing buying is heading towards the 50-Day MA close to 100 pips above (0.65135) – Testing this one would infer a re-entry into the daily ascending channel and will lead to interesting price action.

Any break retest scenario could still be into play, and to spot higher chances of this happening, it is important to look at if the ongoing USD selloff continues or not.

AUDUSD 8H Chart

AUDUSD 8H Chart, August 6, 2025 – Source: TradingView

Sellers could be trying to push prices at the lower bound of the upwards broken daily channel, but failure to do so reconfrims the Neutral Bias in the currency pair.

The current action is key for the future outlook – A re-entry within the channel would boost the technical aspect of the AUD.

A failure to re-enter points to more bearish action and failing to break neither the most recent lows (0.6420) or recent swing highs (0.6530) would lead to some consolidation, similar to what we have observed in other currencies like the CHF.

For now, it is essential to watch the reactions between 0.65 (current trading) and 0.65130 to spot if Sellers try to take the hand.

AUDUSD 1H Chart

AUDUSD 1H Chart, August 6, 2025 – Source: TradingView

The Aussie has found some relief after the consequential NFP miss (US Jobs data review downwards) and this took up the pair to the ongoing 800 pip rally.

AUD/USD is evolving in an ongoing hourly upwards channel that Buyers will have to hold to counteract the effect of Supply confluence: The 0.65 psychological level, Key Moving averages and the lower bound of the Daily April Channel would be points of entry for sellers.

Failing for sellers to appear would re-confirm the more balanced outlook for the pair.

Levels to place on your charts:

Resistance Levels

• Imminent Pivot Zone 0.65 to 0.6520
• 0.6580 Resistance Zone (+/- 70 pips)
• 2025 highs 0.6625 Resistance Zone

Support Levels

• 0.6470 Confluence of Hourly Channel lows and 1H MA 50
• 0.6420 NFP lows
• Daily Support 0.63 to 0.64

Safe Trades!

EUR/USD jumped on Wednesday, extending post-NFP recovery leg which paused in past two days after sharp rally last Friday.

Bulls resumed after consolidation, to hit one-week high and marking almost 61.8% retracement of 1.1788/1.1391 drop, as dollar lost traction on growing signals of more dovish stance from Fed amid unexpected weakness in the US labor sector.

Markets were also nervous about President Trump’s decision about new Chair parson of the US central bank, with dominant negative tone surrounding the US currency.

Daily studies firmed further as 14-momentum broke into positive territory while near-term price action holds above ascending daily Ichimoku cloud top (1.1581) and nearby rising 55DMA (1.1568) which continue to protect the downside for the fourth consecutive day and underpin near-term action.

Fresh acceleration higher needs to register daily close above cracked barriers at 1.1626/37 20DMA / Fibo 61.8%) to further strengthen near-term structure and open way for test of net targets at 1.1695/1.1700 (Fibo 76.4% / psychological).

However, overbought Stochastic warns that bulls may face headwinds, with action required to stay above cloud to keep near term bias with bulls.

Res: 1.1637; 1.1667; 1.1700; 1.1721.
Sup: 1.1610; 1.1581; 1.1568; 1.1527.

Daily Pivots: (S1) 0.9330; (P) 0.9345; (R1) 0.9361; More....

EUR/CHF's rebound from 0.9265 extends higher today. The break of 0.9361 resistance now suggests that whole corrective pattern from 0.9445 has already completed at 0.9265. Intraday bias is back on the upside for 0.9428 resistance first. Firm break there should resume the rise from 0.9218 low through 0.9445. On the downside, however, break of 0.9329 minor support will mix up the outlook again and turn intraday bias neutral.

In the bigger picture, the down trend from 0.9204 (2018 high) might still be in progress considering that EUR/CHF is staying well inside the long term falling channel. However, with bullish convergence condition in W MACD, downside position should be limited in case of another fall. Instead, firm break of 0.9660 resistance will be an important sign of medium term bullish trend reversal.

Daily Pivots: (S1) 146.84; (P) 147.34; (R1) 148.06; More...

Range trading continues in USD/JPY and intraday bias stays neutral. As long as 145.84 support holds, larger rebound from 139.87 is still in favor to continue. On the upside, above 148.07 minor resistance will bring stronger rebound back to retest 150.90. However, on the downside, firm break of 145.84 support will argue that whole rise from 139.87 might have already completed. Deeper fall should then be seen to 142.66 support for confirmation.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Daily Pivots: (S1) 0.8053; (P) 0.8086; (R1) 0.8106; More….

Intraday bias in USD/CHF stays neutral for the moment. On the downside, below 0.8020 will affirm that case that corrective bounce from 0.7871 has completed at 0.8170. Bias will be back on the downside for 07871/7910 support zone. On the upside, though, break of 0.8170 will resume the rise from 0.7871 to 38.2% retracement of 0.9200 to 0.7871 at 0.8379 instead.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8475 resistance holds.

Daily Pivots: (S1) 1.3267; (P) 1.3292; (R1) 1.3324; More...

No change in GBP/USD's outlook and intraday bias remains neutral at this point. On the upside, sustained break of 1.3363 support turned resistance will indicate that the fall has completed as a three-wave correction. Further rally should then be seen back to 1.3587 resistance next. Nevertheless, sustained trading below 38.2% retracement of 1.2099 to 1.3787 at 1.3142 will target 61.8% retracement at 1.2744.

In the bigger picture, up trend from 1.3051 (2022 low) is in progress. Next medium term target is 61.8% projection of 1.0351 to 1.3433 from 1.2099 at 1.4004. Outlook will now stay bullish as long as 55 W EMA (now at 1.3049) holds, even in case of deep pullback.

Daily Pivots: (S1) 1.1539; (P) 1.1564; (R1) 1.1599; More...

EUR/USD's rebound from 1.1390 resumed after brief consolidations and intraday bias is back on the upside. Current development affirms that case that fall from 1.1829 has completed as a three-wave correction. Further rally should be seen to retest 1.1788/1820 resistance zone. On the downside, however, break of 1.1526 minor support will dampen this view and bring retest of 1.1390 instead.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will remain the favored case as long as 1.1604 support holds.

Dollar is softening again across the board in a session marked by light news flow and no scheduled economic data from the US. With little fresh macro direction, traders are shifting their attention to upcoming comments from Fed officials, including Boston Fed President Susan Collins and Fed Governor Lisa Cook. Their views on the labor market will be closely parsed following last Friday’s disappointing nonfarm payrolls report.

Markets have increasingly priced in a September rate cut, with odds now near 87%. The focus will be on whether Collins and Cook signal comfort with further easing, particularly in light of slowing job growth. Any indication that the Fed is moving closer to action could reinforce the Dollar’s slide, especially in a low-volume environment.

Elsewhere in FX, Swiss Franc is among the weakest performers. Markets are increasingly resigned to the reality that Switzerland is unlikely to secure a last-minute reduction in the 39% US import tariffs set to take effect this week. Meanwhile, Meanwhile, Yen also remains weak, as traders show little appetite for safe-haven positioning without a clearer risk-off signal.

On the stronger side, Kiwi and Aussie are leading gains. The move may reflect a mild shift toward risk-on positioning, although that’s not yet clearly confirmed by global equity indices. Euro is also firming, with EUR/CHF in particular showing signs of readiness for bullish breakout from its recent consolidation range. Sterling and the Canadian Dollar are trading more mixed in the middle.

In Europe, at the time of writing, FTSE is up 0.21%. DAX is down -0.03%. CAC is up 0.17%. UK 10-year yield is down -0.012 at 4.51. Germany 10-year yield is up 0.007 at 2.641. Earlier in Asia, Nikkei rose 0.60%. Hong Kong HSI rose 0.03%. China Shanghai SSE rose 0.45%. Singapore Strait Times rose 0.45%. Japan 10-year JGB yield rose 0.025 to 1.501.

Franc hit by tariff shock, CHF/JPY drops towards 180, but 178 should hold

Swiss Franc has come under heavy pressure since early August, with trade tensions driving much of the weakness. The US stunned markets last week by imposing a 39% tariff on Swiss imports, accusing Bern of failing to make “meaningful concessions” on trade. The duties, effective Thursday, will impact a broad swath of Swiss exports — including high-value goods like pharmaceuticals and luxury watches — which are heavily reliant on access to the US market.

Swiss officials have scrambled to Washington in a final attempt to prevent the tariffs from being implemented. President Keller-Sutter and Business Minister Parmelin arrived Tuesday, and a meeting with US Secretary of State Marco Rubio is scheduled for Wednesday. With no confirmed talks yet with US trade or commerce officials, hopes for a breakthrough might be fading, further weighing on the Franc.

CHF/JPY is reflecting this pressure technically, with the pair confirming a short-term top at 186.60 after breaking support at 183.19. Near-term outlook favors a deeper correction to (now at 180.79) and possibly below.

But strong support should emerge around 178 support zone, (61.8% retracement of 173.06 to 186.00 at 178.00 and 38.2% retracement of 163.83 to 186.00 at 178.29) to contain downside. Large up trend is expected to resume through 186.00 at a later stage, if tensions with Washington ease in the coming weeks.

European data wrap: UK construction slumps, Eurozone data miss

The UK construction sector saw a sharp deterioration in July, with the PMI plunging to 44.3 from 48.8 — its lowest level since May 2020 and far below the expected 49.2.

According to S&P Global, British firms cited a lack of tender opportunities and growing hesitancy from clients amid both domestic and international uncertainty. The data reinforces broader concerns about the UK’s economic momentum heading into the second half of the year.

In the Eurozone, June retail sales rose 0.3% mom, shy of the expected 0.4% mom. Modest gains were seen across food, non-food, and fuel categories. Adding to the downbeat tone, German factory orders unexpectedly declined by -1.0% mmm in June, missing forecasts for a 1.0% mom rise.

Japan real wages remain negative despite stronger 2.5% nominal growth

Japan’s real wages continued to contract in June, falling -1.3% yoy — the sixth straight month of decline. While that marked an improvement from May’s revised -2.6% yoy drop, persistent inflation, particularly in food prices, continues to erode household purchasing power. Consumer prices used for wage calculations rose 3.8% yoy in June, far outpacing nominal wage gains.

Nominal wages climbed 2.5% yoy, up from 1.4% yoy in May and rising for the 42nd consecutive month. However, the reading missed expectations of 3.2% yoy, tempering the positive headline. Base pay rose 2.1% yoy, and special earnings — mainly bonuses — grew 3.0% yoy, supporting a modest rise in overall pay levels during the reporting month.

NZ unemployment rate rises to 5.2%, RBNZ August cut in play

New Zealand’s Q2 labour market report confirmed continued softening, with employment falling -0.1% qoq and unemployment edging up to 5.2%. That marks the highest jobless rate since 2020, though still slightly below consensus of 5.3%. Participation rate also dropped -0.2 points to 70.5%, its lowest since early 2021, suggesting a cooling in demand.

Wage growth offered a mixed signal to the RBNZ. The private sector wage index rose 0.6% qoq, higher than expected 0.5% qoq and up from Q1’s 0.4%. But annual wage inflation slowed from 2.5% to 2.2% — the lowest in over three years — hinting that longer-term wage pressures are easing.

The overall report doesn’t deviate much from RBNZ’s May projections and is unlikely to alter its near-term stance. With inflation running at 2.7% yoy in Q2, markets still expect one more 25bps rate cut from the current 3.25% this month. But the central bank is likely to stay cautious on signaling further easing until price and wage dynamics show more decisive downside momentum.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1539; (P) 1.1564; (R1) 1.1599; More...

EUR/USD's rebound from 1.1390 resumed after brief consolidations and intraday bias is back on the upside. Current development affirms that case that fall from 1.1829 has completed as a three-wave correction. Further rally should be seen to retest 1.1788/1820 resistance zone. On the downside, however, break of 1.1526 minor support will dampen this view and bring retest of 1.1390 instead.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will remain the favored case as long as 1.1604 support holds.

The UK construction sector saw a sharp deterioration in July, with the PMI plunging to 44.3 from 48.8 — its lowest level since May 2020 and far below the expected 49.2.

According to S&P Global, British firms cited a lack of tender opportunities and growing hesitancy from clients amid both domestic and international uncertainty. The data reinforces broader concerns about the UK’s economic momentum heading into the second half of the year.

In the Eurozone, June retail sales rose 0.3% mom, shy of the expected 0.4% mom. Modest gains were seen across food, non-food, and fuel categories. Adding to the downbeat tone, German factory orders unexpectedly declined by -1.0% mmm in June, missing forecasts for a 1.0% mom rise.