This week, following the Bank of Japan's aggressive interest rate hike and the Federal Reserve's decision to keep rates unchanged, the Bank of England (BoE) will be the next market focal point. Investors widely anticipate that against the backdrop of easing global inflationary pressures, the BoE will announce a rate cut at 7 PM Beijing time on Thursday. Swap market data indicates that traders believe there is approximately a 65% chance of the BoE cutting rates on Thursday, a significant increase from the 40% seen in early July.

Analysts have pointed out that despite the still high inflation in the UK's service sector, rising unemployment and falling commodity prices have led the BoE to possibly focus more on long-term inflation and growth prospects. Ranjiv Mann, a portfolio manager at Allianz Global Investors, stated that market expectations for a rate cut by the BoE have been on the rise, possibly due to disappointing economic data from the eurozone, which has tipped the scales in favor of a rate cut this Thursday.

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On Tuesday of this week, the eurozone's second-quarter GDP data was released, showing a sequential growth of 0.3%, slightly below the European Central Bank's forecast of 0.4%. Despite the relatively strong latest economic data from the UK, investors still believe that recent signs of slowing growth and inflation in the eurozone and the US have prompted them to bet on the UK economy also following a similar trajectory of economic slowdown in the future.

Especially, Huw Pill, the BoE's Chief Economist, stated in July that investors' attention is not only focused on inflation but also increasingly on broader economic indicators, including wage growth. Data shows that in the three months leading up to May, wage growth in the UK slowed, and the unemployment rate rose to 4.4%, slightly higher than expected.

Sree Kochugovindan, an economist at Abrdn, indicated that changes in the labor market are sufficient to drive a rate cut in the UK.

Guy Stear, Head of Strategy at Amundi Investment Institute, believes that the UK's future growth prospects are weak, and even with a rate cut, the quarterly GDP growth rate in the UK is expected to remain below 1.5% through 2025.

Since last August, the BoE has kept the interest rate at 5.25%, with continuous calls for a rate cut. The UK's overall inflation rate has hit the 2% target for two consecutive months. Due to rising energy prices, inflation is expected to increase later on.

Some investors believe that this may pave the way for the BoE to cut rates on Thursday and then maintain the rate unchanged in the following meetings. Mark Dowding, Chief Investment Officer at RBC BlueBay Asset Management, believes that Thursday may be the best opportunity for the BoE to cut rates, and it is a one-time opportunity only. By the time of the next rate meeting, the UK's inflation rate may be higher, thus providing only a brief window for a rate cut.