Traders cut bets on the Bank of England raising interest rates.

Affected by the fall in oil prices and a decrease in inflation expectations, traders are currently betting that the Bank of England will only raise interest rates once this year. The currency market is currently betting that by the end of the year, the Bank of England will have raised rates by a total of 36 basis points - the lowest level of expectations in over a month. According to interest rate derivative contracts tied to policy meeting dates, this expectation is equivalent to a 25 basis point rate hike, with the probability of another rate hike now less than 50%. Due to the UK's high dependence on imported energy, its economy is highly vulnerable to the impact of conflicts; therefore, traders believe that a swift resolution of the conflict would help further alleviate the economic pressures. Just two weeks ago, the market widely expected the Bank of England to raise rates twice this year; however, in the weeks following the US and Israeli attacks on Iran, market expectations at one point reached as high as four rate hikes. Currently, traders see a 50% probability of the first rate hike occurring in July. Last week, Bank of England Governor Bailey stated that inflation expectations in the UK have not shown signs of "unanchoring"; previously released data showed that UK inflation in April had slowed to its lowest level in over a year.