The Financial institution of England is “virtually sure” to chop rates of interest subsequent month after Britain’s financial system shrank for a second month in a row.
Cash markets have priced an 89pc probability that members of the Financial Coverage Committee will vote to cut back the Financial institution Price from 4.25pc to 4pc at their subsequent assembly in August.
The pound fell 0.6pc towards the greenback to beneath $1.35 after official figures confirmed Britain’s financial system shrank in Could as Rachel Reeves’s tax raid continued to tug on spending.
A second rate of interest reduce is priced in by merchants earlier than the top of the 12 months, with the market anticipating a 3rd reduce no later than June 2026.
The UK’s gross home product (GDP) contracted by 0.1pc throughout Could, in keeping with the Workplace for Nationwide Statistics, amid a pointy drop in retail gross sales.
It adopted a 0.3pc downturn in April after the Chancellor imposed larger Nationwide Insurance coverage contributions on employers, in addition to a rise within the minimal wage.