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UK interest rate cuts unlikely this year amid Iran war – and a rise could be ahead

Markets predict Bank of England will hold rates in 2026 as bond yields soar on forecasts of prolonged conflictIran war drives oil prices above $100 a barrelBusiness live – latest updatesUK interest rates are not expected to be cut this year and could even rise next summer, according to financial markets, in a dramatic reversal of forecasts before the US-Israel war on Iran.Markets data on Monday showed that investors predict the Bank of England will most likely keep its base rate on hold at 3.75% for the remainder of the year, and would raise them to 4% next June. Continue reading...

Mar 09, 2026 &03200909202631; 11:20 UTC www.theguardian.com Trending 5/5

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Negative for markets

Sentiment score: -65/100

High impact Medium-term (weeks)

WHAT THIS MEANS

UK interest rate cuts are now unlikely in 2026 with markets pricing in potential rate hikes to 4% by June 2026, reversing earlier expectations. The shift is driven by geopolitical tensions with Iran escalating oil prices above $100/barrel, creating inflationary pressures that constrain monetary easing.

AI CONFIDENCE

78% High

SENTIMENT GAUGE

NEWS POWER SCORE

AFFECTED ASSETS

↑

British Pound / US Dollar

GBPUSDCurrency

Expected to rise

Higher UK interest rates support GBP strength relative to USD

↑

Oil (WTI Crude)

CL=FCommodity

Expected to rise

Iran tensions driving crude oil above $100/barrel

↓

S&P 500

^GSPCIndex

Expected to decline

Higher rates and oil prices create headwinds for equity valuations

↑

10-Year Treasury Yield

^TNXBond

Expected to rise

Bond yields soaring on inflation expectations and higher rate forecasts

↓

FTSE MIB (Italy)

FTSEMIB.MIIndex

Expected to decline

European equities pressured by higher rates and geopolitical risk

PRICE HISTORY

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⚡ SUGGESTED ACTION

Short equity indices and long energy/commodity positions. Consider GBP strength plays and avoid duration-heavy bond positions. Monitor oil price levels as key inflation indicator for BoE policy decisions.

KEY SIGNALS

BoE rate hold expected through 2026Potential 25bp rate hike priced for June 2026Oil prices above $100/barrel on Iran conflictBond yields rising sharplyInflation concerns overriding rate cut expectationsGeopolitical risk premium embedded in markets

SECTORS INVOLVED

EnergyFinancialsConsumer DiscretionaryUtilities

Analysis generated on Mar 09, 2026 at 13:40 UTC

Disclaimer: This analysis is generated by artificial intelligence for informational purposes only and does not constitute financial advice, investment recommendation, or solicitation. Original reporting by The Guardian Business. Always conduct your own research and consult a qualified financial advisor before making investment decisions.

UK interest rate cuts unlikely this year amid Iran war – and a rise could be ahead

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