Seeds of Wisdom RV and Economic Updates Thursday Afternoon 8-7-25
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Bank of England Expected to Cut Interest Rate to 4.0% Despite Rising Inflation
BoE expected to cut rates from 4.25% to 4.0%
UK inflation accelerates, while growth continues to contract
GBP/USD at risk of falling toward August lows near 1.3140
The Bank of England (BoE) is poised to announce a 25-basis-point interest rate cut on Thursday, reducing the benchmark rate from 4.25% to 4.0%, according to growing market consensus. Analysts expect that seven out of nine Monetary Policy Committee (MPC) members will vote in favor of the cut, up from just three in the previous meeting.
The decision will be accompanied by the meeting Minutes and the Monetary Policy Report, offering insight into the BoE’s updated economic outlook and inflation projections. Following the announcement, Governor Andrew Bailey is scheduled to deliver a press conference outlining the rationale behind the rate cut and potentially signaling the bank’s future policy trajectory.
Economic Backdrop: A Conflicting Picture
The BoE last held rates steady in June. At that time, three MPC members cited:
Weakened labor market conditions
Subdued consumer demand
Wage growth trending toward sustainable levels
Since then, economic indicators have continued to show strain:
UK GDP contracted 0.1% MoM in May, following a 0.3% contraction in April
Production output fell 0.9%
Construction output declined 0.6%
Services output rose slightly by 0.1%
These figures paint a troubling picture of a slowing UK economy, just ahead of the Q2 GDP estimate set for release on August 14.
Inflation Rebounds—Complicating the BoE’s Dilemma
Despite declining growth, inflation rose sharply in June:
Headline CPI climbed to 3.6% YoY, up from 3.4% in May
Core CPI increased to 3.7% YoY, from 3.5%
Services inflation held steady at 4.7%, with food prices showing their biggest jump since February 2024
Meanwhile, labor market conditions continue to loosen, with the unemployment rate climbing to 4.7% in April, from 4.4% at the start of the year.
As the central bank weighs slowing growth against persistent inflationary pressures, Governor Bailey recently reiterated:
“I really do believe the path is downward”—referring to interest rates.
Revised Economic Forecasts Expected
Analysts anticipate that the BoE may:
Upgrade inflation projections due to sticky services inflation and rising food prices
Downgrade growth expectations, reflecting weak consumer demand and broad-based output declines
Market Reaction: GBP/USD Faces Downside Risk
Ahead of the announcement, GBP/USD is trading just above 1.3300, struggling to extend gains. The central bank’s split vote and cautious tone are expected to exert downward pressure on the British Pound.
According to Valeria Bednarik, Chief Analyst at FXStreet:
“The GBP/USD pair hovers around its weekly peak in the 1.3330 region, without any technical sign of additional gains ahead.”
She continues:
“The pair could turn bullish only if it breaks above 1.3400, an unlikely scenario given the expected BoE announcement. On the downside, watch the 1.3250 support—if breached, GBP/USD could target the August low at 1.3141.”
Conclusion
The Bank of England faces a complex policy crossroads: inflation is rising, but growth is faltering. While a rate cut appears imminent, the communication strategy and vote split may be the biggest market movers. The fate of the GBP/USD pair hangs in the balance, with downside risks mounting unless the BoE delivers a surprisingly hawkish outlook.
@ Newshounds News™
Source: BeInCrypto
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Canada & Mexico to Join BRICS? The Fall of the US Dollar in 2024?
Exploring BRICS Expansion in the Western Hemisphere
Mexico formally declines BRICS membership
Canada remains silent on BRICS engagement
Is the US Dollar's global dominance at risk?
Potential Expansion of BRICS: An Analysis of Canada and Mexico’s Involvement
The BRICS bloc—originally composed of Brazil, Russia, India, China, and South Africa—has been rapidly expanding. In August 2023, the alliance extended invitations to several countries, five of which officially joined in 2024. This growth has sparked speculation about whether Western-aligned nations, including Canada and Mexico, could eventually pivot toward BRICS, potentially accelerating dedollarization efforts worldwide.
Mexico’s Stance on Joining BRICS
Speculation surrounding Mexico’s potential entry into BRICS intensified in mid-2023, ahead of the bloc’s August summit. However, Mexican President Andrés Manuel López Obrador publicly refuted such claims, affirming that Mexico would not seek membership in the alliance. The decision aligned with Mexico’s longstanding trade, economic, and geopolitical ties with the United States under frameworks such as USMCA.
Canada’s Position Regarding BRICS
In contrast to Mexico, Canada has made no official statements regarding BRICS membership. To date, there have been no public discussions, diplomatic engagements, or policy shifts that indicate Canadian interest in aligning with the BRICS bloc. Canada remains a core member of Western institutions such as the G7, NATO, and the OECD, further reinforcing its alignment with the existing US-led financial order.
Will Canada and Mexico Join BRICS?
Based on current geopolitical alignments, it appears highly unlikely that either Canada or Mexico would pursue BRICS membership in the near term—particularly with the explicit goal of weakening or replacing the US Dollar. While 2023 saw increasing concerns over the dollar’s global dominance, including inflationary pressures and internal US political division, both Canada and Mexico remain deeply integrated into the US-centric financial and security architecture.
BRICS’ Aspirations and Western Countries’ Responses
BRICS continues to push for greater economic sovereignty and a shift away from dollar dependency, aiming to promote settlement in local currencies and eventually introduce a shared digital or commodities-backed currency. These efforts have been well-received in parts of the Global South and among energy-exporting nations seeking alternatives to SWIFT and IMF dollarization structures.
Yet, the idea that NATO-aligned nations such as Canada and Mexico would join this movement remains speculative at best. Their participation in the US-led global order, access to Western capital markets, and dependence on the North American economic ecosystem make BRICS membership both politically improbable and economically costly.
Conclusion: Realignment or Rhetoric?
Despite BRICS’ expansion and continued calls for monetary multipolarity, neither Canada nor Mexico are expected to deviate from their current trajectories. While the US Dollar faces challenges, its foundational role in global trade, reserves, and institutional finance still ensures that Western partners remain tethered—for now.
As BRICS gains more influence in the Global South, 2024 will be a year to watch—but expectations of Western defection to the bloc remain premature.
@ Newshounds News™
Source: aped.ai
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BRICS to Discuss Joint Response to Trump’s Tariffs
Lula calls out Trump’s “unilateralism” and threat to multilateral trade
BRICS members may coordinate action in response to rising tariffs
Brazil, India, and China seek a unified strategy to limit U.S. economic pressure
Lula Urges BRICS Coordination Amid Rising U.S. Tariffs
The BRICS bloc—comprising Brazil, Russia, India, China, and South Africa—is preparing to discuss a coordinated response to U.S. President Donald Trump’s escalating tariff threats. The initiative comes directly from Brazilian President Luiz Inácio Lula da Silva, who criticized Trump’s approach to international trade as a deliberate attempt to undermine multilateral institutions.
“What President Trump is doing is tacit — he wants to dismantle multilateralism, where agreements are made collectively within institutions, and replace it with unilateralism, where he negotiates one-on-one with other countries,” Lula told Reuters.
President Lula stated that he would initiate conversations with fellow BRICS leaders, beginning with Indian Prime Minister Narendra Modi on Thursday, followed by China’s President Xi Jinping and others. His goal: to understand how each nation is affected by the U.S. measures and to formulate a joint response.
“I’m going to try to discuss with them about how each one is doing in this situation, what the implications are for each country, so we can make a decision.”
Where BRICS Tariffs Currently Stand
U.S.–Brazil Tariffs: Currently at 50%
India Tariffs: Increased today by 25%, now totaling 50%
China–U.S. Tariffs: Paused for now
Russia Tariffs: Above 30%
Canada Tariffs: Recently raised to 35%
EU Goods: Settled at a new 15% tariff
Trump has recently labeled the BRICS alliance as “anti-American”, issuing public threats to impose an additional 10% blanket tariff on bloc members. Some individual BRICS nations, notably India and China, have explored bilateral deals with the U.S. to mitigate tariff effects. However, growing pressure may force a unified BRICS front to resist escalating U.S. protectionism.
Brazil’s Leadership Role in BRICS Response
President Lula emphasized that Brazil currently holds the BRICS presidency, granting it a leading role in shaping the bloc’s diplomatic and economic posture. In his interview, he expressed concern not just over tariffs, but over Trump’s broader agenda to dismantle multilateral norms:
“I want to discuss with our allies why Trump is attacking multilateralism and what his goals may be.”
Notably, Lula did not reference any intention to engage Trump directly as part of this initiative, suggesting that the response will remain within the BRICS framework for now.
The Bigger Picture: Trump’s Tariff Offensive
In recent days, President Trump has accelerated a wave of protectionist trade measures as part of his self-imposed tariff deadline. These include:
35% tariffs on Canadian imports
50% tariffs on Brazilian goods
15% settled tariffs on EU exports
All of this appears to be part of a broader realignment of U.S. trade policy aimed at strengthening leverage ahead of key diplomatic deadlines.
Conclusion: BRICS Eyes a Coordinated Strategy
The growing web of tariffs has created significant uncertainty for global markets and placed BRICS nations on alert. As Lula takes steps to convene the bloc’s leadership, the prospect of a cohesive BRICS economic strategy—and possibly retaliatory action—marks a pivotal moment in the evolving U.S.–BRICS relationship.
@ Newshounds News™
Source: Watcher.Guru
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