Monthly Cash Review – GBP

The quiet storm in UK markets

Bank of England to hold rates on 6 November despite soft data; markets eye cuts in February or December. Yields flatten, QT tweaks, and repo uptake surge as UK budget looms.

14 November 2025

By the time you read this, the Bank of England’s 6 November meeting will be history—and hopefully not the kind of history for all the wrong reasons. Leading up to the decision, markets went from “no chance” to “maybe, just maybe” on a rate cut, jumping from 5% to 30% odds after a trifecta of soft data: inflation cooled to 3.8%, unemployment crept up to 4.8%, and wage growth lost its swagger.

Then came 24 October’s retail sales surprise. Market experts, ever the optimists, suggested the economy was muddling through Q4—translation: not sinking, not soaring, just … muddling. Their view? A cut in February or December is more likely than November.

At the time of this writing, markets were pricing in two cuts by Q2 2026, up from one lonely cut two weeks ago. The rate floor slid to 3.38% from 3.62%, with some bold souls calling for 3% next year. Clearly, hope springs eternal.

On yields, the sterling money market curve decided to flatten like a pancake—losing 15 bp in the 6–12-month segment, now hovering near 4.05%. Our strategy—risk-off ahead of the UK budget (because who doesn’t love a £30 billion hole to fill?).

The LVNAV strategies stayed short at 25–30 days, rebuilding liquidity after some outflows, while sovereign strategies clung to overnight reverse repo paying up to 4.05%, and beating bills by a modest 5–10 bp.

Headline drama had longer maturity gilt yields tumbling, thanks to softer data, lower US yields, and BoE’s QT makeover—less selling, shorter maturities, and a little love for reserves. Meanwhile, repo rates stretched higher with overnight at 4.05%, 8 bp above SONIA. The BoE’s short-term repo facility saw £84 billion uptake. Will quantitative easing calm the frenzy? Stay tuned.

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