Danske Bank says signs of broader pass‑through of inflation are limited: core inflation has held at 2.6% for three months and firms' one‑year own‑price inflation expectations have fallen to 3.8%. July GDP rose 0.4% and the labour market is cooling modestly — insufficient to justify an immediate rate hike. Governor Bailey remains inclined to wait; Deputy Governor Lombardelli has said a clear second‑round inflation effect is needed before policy shifts. Danske's base case is Bank Rate at 3.75% thr

Danske Bank says signs of broader pass‑through of inflation are limited: core inflation has held at 2.6% for three months and firms' one‑year own‑price inflation expectations have fallen to 3.8%. July GDP rose 0.4% and the labour market is cooling modestly — insufficient to justify an immediate rate hike. Governor Bailey remains inclined to wait; Deputy Governor Lombardelli has said a clear second‑round inflation effect is needed before policy shifts. Danske's base case is Bank Rate at 3.75% through Q2 2027, though persistent high energy prices and stronger growth could prompt an 'insurance' hike. Markets are priced aggressively; a less hawkish BOE than expected would likely push EUR/GBP higher.