Market analysts say that the Fed's significant 50 basis point interest rate cut is having an impact, and the market believes that the Bank of England will tend to follow the Fed's approach and also implement interest rate cuts.

According to money market pricing, the possibility of the Bank of England cutting interest rates by 25 basis points for the second time has risen to about 33%, while two weeks ago this possibility was close to zero.

The expected shift is a drag on UK bond yields and sterling.

Bond investors are closely monitoring the Bank of England's annual decision on the pace of the QT program on Thursday. The Bank of England may announce an accelerated QT pace on Thursday. Citigroup and JPMorgan expect the Bank of England to expand the program to £ 120 billion.

Francis Diamond, Head of UK, Euro and Global Inflation Strategy at JPMorgan, stated in a research report that the market's response to this measure will be limited.

The inflation rate in the UK remained stable in August, but the service sector inflation rate, which is closely monitored by the Bank of England, has increased. Some forecasters predict that the rate of interest rate decline in the UK will be slower than in the US and the eurozone.

Some analysts believe that the slower rate of interest rate cuts by the Bank of England compared to the Federal Reserve may boost the pound and harm UK exports.

Geoffrey Yu, an economist at Bank of New York Mellon, said, "Under normal circumstances, other major economies should continue to implement loose policies, hoping to stimulate the economy by lowering interest rates and ensuring that the exchange rate of this currency against the US dollar is not too high, so as not to damage exports

However, he stated that it is no longer certain whether the Bank of England will passively follow the Federal Reserve, as considering domestic conditions remains crucial.

Indeed, the inflation rate in the UK is lower than the central bank's forecast, but despite clear evidence of persistent price pressures, interest rate cuts are still difficult to make a reasonable choice.

Kyle Chapman, a foreign exchange market analyst at Ballinger Group, said, "The inflation surge in August is difficult for policy makers to ignore, and the continued strength of the service sector supports the market's moderate possibility of a second rate cut this week. Next year's data should be favorable for the Bank of England, but for now, there are enough reasons to keep the rate cut gradual

Daily chart of GBP/USD