Rising oil prices and firmer inflation expectations have pushed markets to
increase bets on Bank of England tightening in 2026. Escalation of conflict in
the Middle East has heightened concern that inflation may stay elevated, leading
markets to fully price a 25bp Bank of England hike in November and to put the
probability of a December move at 93%. Last week markets priced a cumulative
38bp of tightening in 2026.