UK Weekly: UK-US trade deal not a game changer; BoE’s hawkish shift

We have argued that higher US tariffs wouldn’t reduce UK GDP by much. It follows that the UK-US trade deal won’t be a game changer. We also argued that investors had got ahead of themselves in expecting three more 25bps interest rate cuts in 2025. The Bank of England’s communications this week suggest we had it about right. Looking further ahead, the risks are tilting towards inflation and interest rates being lower than most expect.