Leading Indicators | Softer wages, steady rates, stronger flows

Fed poised for first rate cut of 2025,  BoE expected to stand firm

Central banks globally are gearing up for a pivotal week with key rate decisions ahead. In the US, the Fed is expected to deliver its first rate cut of the year, lowering the target range to 4.00-4.25%. In the UK, the BoE is likely to hold rates steady at 4.00%. With limited fiscal headroom and inflation still elevated, the BoE is expected to remain cautious, maintaining current rates until price pressures show more consistent moderation. Meanwhile, in Japan, policy is set to remain unchanged at near-zero levels.

UK labour market cools as pay growth eases 

The latest UK labour market data reinforces that cautious stance. Annual growth in regular earnings, excl. bonuses, slowed to 4.8% in the three months to July, the weakest in over two years, while payroll employment and vacancies fell, pointing to softer labour demand. Attention now turns to tomorrow’s inflation release, where CPI is expected to edge higher to around 3.9–4.0%, before the BoE meets on Thursday.

Strengthening bilateral ties signals opportunity for further inflows

The UK and US are set to unveil over $10bn in deals during President Trump’s visit this week, led by a nuclear partnership to fast-track advanced reactor approvals, a clear sign of closer bilateral cooperation. Against a backdrop of modest tariffs on UK exports, overall terms remain constructive, with new commitments in energy and tech expected to draw further US capital. Already, US investment into UK commercial real estate in Q3 is tracking +2% higher than the same period in 2024, pointing to resilient demand and scope for further inflows as ties with the US strengthen.