Bank of England Cuts Rates, US-China Trade Talks Continue Amid Inflation Uncertainty

The week ahead is marked by significant global economic events focusing on trade developments and inflation data, impacting FX and bond markets. Following the announcement of a UK-US trade deal, investors are keenly watching for further U.S. trade announcements, particularly regarding China, amid ongoing tariff uncertainties. The Bank of England cut rates from 4.5% to 4.25%, signaling expectations of a downward inflation trend, though policy remains cautious with mixed commentary on the future path of monetary easing. In the U.S., despite tariff-related worries, retail sales and inflation data are expected to show moderate increases, with limited immediate impact from recently imposed reciprocal tariffs, given frontloading by businesses and hopes for trade resolutions. These trade uncertainties continue to weigh on global equity markets, with sluggish U.S. equity fund flows contrasting with stronger European and Asian inflows, while commodities like oil and gold experienced volatility influenced by OPEC+ dynamics and shifting investor sentiment. Overall, markets remain sensitive to trade negotiations and economic data releases as they navigate the balance between growth concerns and inflation risks.