The Bank of England is anticipated to implement a 0.25% interest rate hike this month, which would push the Bank rate to 5.50%.

Nevertheless, there has been a decrease in the likelihood of additional rate hikes by the end of the year, mainly due to comments from various Bank officials suggesting a shift towards fewer hikes while maintaining elevated interest rates for a longer duration.

Amidst ongoing economic challenges and mounting headwinds, the Bank has acknowledged the genuine risk of tightening monetary policy excessively, which could further hamper growth prospects, particularly since the effects of previous rate increases have not yet fully materialized.

The upcoming week will bring crucial data releases, including vital labor market statistics that continue to be pivotal in shaping the Bank's policy decisions.

In the United States, robust economic data leaves the possibility of one more rate hike on the table before the year concludes, although we do not anticipate any policy changes this month. Market expectations are leaning towards rate cuts commencing in the first half of 2024, as the focus shifts from combating inflation to stimulating economic growth. The next inflation report is scheduled for release next week, and analysts are anticipating a modest uptick to 3.6%.

In Europe, economic data continues to underperform, with markets pricing in only a 30% likelihood of a rate hike at the central bank meeting scheduled for next week.

In the currency markets, the strength of the US dollar remains dominant, driven by the superior performance of the US economy and concerns about the economic outlook in China. As a result, GBP/USD has dipped to a three-month low, falling below the 1.2500 level, while GBP/EUR continues to trade within the well-established range of 1.1500 to 1.1750.