Cable Gains Support Amid "Hawkish Cut" as Gilt Yields Increase

Written by Emily J. Thompson, Senior Investment Analyst

Source: InvestingliveForex

Updated: Dec 18 2025

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Source: InvestingliveForex

Bank of England Rate Cut: The Bank of England cut the Bank Rate to 3.75% from 4.00%, but market reactions were unexpectedly strong, with the pound rising due to a divided Monetary Policy Committee and indications that further cuts may be limited.
Market Reactions: Following the announcement, GBP/USD rose approximately 35 pips, while UK 2-year Gilt yields increased by 5 basis points, reflecting a shift in market expectations regarding future rate cuts.
Economic Outlook: The Bank revised its Q4 GDP forecast down to 0.0%, impacting market sentiment and suggesting a cautious approach to future rate cuts, which are now anticipated to be slower than previously thought.
Impact on FTSE 100: The FTSE 100 index is declining as the stronger pound negatively affects large companies that earn in USD, while the focus now shifts to the upcoming ECB rate decision.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.