Public sector pay rises unlikely to drive up inflation, says Bank of England after interest rate cut – as it happened

City economists predict further cut in November, after first reduction in UK interest rates since 2020, as Bank lifts its growth forecast for this year

• Bank of England cuts interest rates to 5% in first reduction since March 2020

The pound is weakening as traders anticipate the Bank of England's interest rate decision at noon today.

Sterling has dropped by over half a cent against the US dollar to $1.2795, a three-week low.

For the markets, a cut from the Bank of England is a matter of when and not if; however, provided the Bank of England signals it's the beginning of a cycle, a cut would likely boost the FTSE 100 and weaken the Pound.

Alternatively, the decision to hold rates would likely inspire the greatest volatility: rates markets imply a 57% chance the Bank of England cuts tonight, and the pricing out of that move would likely undermine equities and give a shot in the arm to the Pound.