【GBP Fixed Deposits】GBP Fixed Deposit Interest Rates Up to 1.68% Citi Predicts UK Rate Cuts in April

The Bank of England will hold its interest rate decision next Thursday (March 19). Citibank’s investment strategy and asset allocation chief Liao Jiahao predicts that rates may not be cut this time. Citibank analysts expect rate cuts of 25 basis points in April, July, and November this year. The GBP/USD three-month forecast is 1.31, with a 6 to 12-month forecast of 1.23.

Click the chart 👇👇👇👇 to see GBP deposit rate comparisons

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Today (March 12), GBP is quoted at 1.3445. The last rate cut by the Bank of England was 0.25% at the end of last year, bringing the policy rate to 3.75%.

Although Citibank predicts only three rate cuts totaling 0.75% in the next two quarters, recent moves by five major banks have accelerated GBP fixed deposit rate cuts, including Standard Chartered reducing the 7-day annual rate by 1.8%, now at 12%, and other banks like Chuangxing racing to cut rates; only digital banks are holding firm.

Latest GBP Fixed Deposit Trends:

Rate hikes:

• WeLab Bank (WeLab) sharply increased 3-month rate by 0.3% to 3.3%, and raised the 6-month rate by 0.2% to 3.2%.

Short-term cuts, long-term increases:

• CCB Asia cut the 1-month rate by 0.3% to 3.35%, but slightly increased the 6-month and 1-year rates by 0.05% to 3.35%.

Rate cuts:

• Standard Chartered cut the 3-month rate by 0.4% to 2.9%, and the 6-month and 1-year rates by 0.3% to 2.8% and 2.7%, respectively.
• ICBC Asia lowered the 3-month and 6-month rates by 0.1% to 3.4%.
• Bank of China Hong Kong reduced the 3-month, 6-month, and 1-year rates by 0.2%, with the 3-month at 1.9%, and 6-month and 1-year at 1.95%.
• Chuangxing Bank lowered the 2-month, 3-month, 6-month, and 9-month rates by 0.1% to 2.3%.

Hang Seng cancels 17% ultra-high rate; digital banks raise deposits against the trend

Hong Kong banks have experienced frequent adjustments to fixed deposit rates, with a rare reversal at the high end. On New Year’s Day, Hang Seng launched a 17% annual rate, but it expired on February 22, losing its top spot to CCB Asia’s 16.8%.

For 3-month deposits, excluding CCB Asia’s 6.88% (which only applies to the top 25% of deposits), it was outperformed by Shanghai Commercial Bank’s 3.5%.

In the half-year category, CCB Asia’s rate was cut, while Shanghai Commercial Bank’s remained firm at 3.35%, narrowly winning the top spot. About a year ago, the high-rate rankings were dominated by Shanghai Commercial Bank for 3 months, 6 months, and 1 year, but recent years saw CCB Asia’s aggressive push for 4%, reshuffling the rankings. Recently, the mid-term rate rose again to 3.35%, earning it a “double crown.”

Standard Chartered cuts rates across the board, with the 7-day rate dropping by 1.8% to nearly 12%

High-yield comparison:

7-day short-term:

• CCB Asia 16.8%
• Fubon 15.38% (reduced 5.5% in June last year)
• Hang Seng 15%
• HSBC 14% (via branch or phone banking)
• Chiyu 13.88%
• Standard Chartered 12% (cut by 1.8% in March)
• HSBC (liquid wealth annual rate), China Trust, Nanyang Commercial Bank 13%
• DBS (online account) 11% (cut by 4% in January), BOC Hong Kong 11%
• DBS (branch account) 10% (cut by 8% in January)
• Chuangxing 2.3%
• ZA Bank 0.01%

Mid- to long-term high-yield leaders:

• 1 month: Fubon 5.38% (cut 2.7% in June last year)
• 3 months: Shanghai Commercial Bank 3.5%, CCB Asia 6.88% (limited to top 25%)
• Half-year: Shanghai Commercial Bank 3.35%
• 1 year: ICBC Asia + CCB Asia 3.3%

Citibank’s Liao Jiahao predicts GBP at an average of 1.31 over 3 months

Expert forecasts for short, medium, and long-term GBP:

• Citibank’s Liao Jiahao: 3-month forecast at 1.31, 6-12 months at 1.23, long-term target 1.3.
• OCBC Hong Kong economist Wang Hao-ting: Political risks in the UK remain high, and tensions in the Middle East continue to pressure the GBP. The Labour Party recently lost a by-election, increasing pressure on Prime Minister Rishi Sunak before the May local elections. Market remains cautious about fiscal risks and political uncertainty, weighing on the GBP. Expect GBP/USD to range between 1.42 and 1.45 over the next two weeks, with a forecast of 1.42 mid-year and 1.45 by year-end.
• Technical chart levels: Last Monday (March 2), GBP sharply fell to 1.3482, then stabilized around 1.34. Middle East crisis is pushing energy prices higher, likely to increase inflation pressures. With UK CPI well above 2%, the Bank of England may hold off on rate cuts. GBP has been declining since February, currently in a downtrend, with support around 1.35.

UK may become the biggest loser from new tariffs, with GBP weakest next quarter

Overall analysis suggests GBP is likely to fall short-term due to four main reasons:

(1) Political risks: Starting in Q2, GBP could face more negative factors, especially with the May local elections adding political uncertainties. The recent Labour Party defeat in a by-election worsens Prime Minister Rishi Sunak’s standing.

(2) Tariff concerns: Market fears that the UK could become the biggest loser from “new tariffs,” increasing from 10% to 15%. The British Chambers of Commerce estimates this could raise UK export costs to the US by £3 billion and impact 40,000 UK companies.

There are reports that UK officials are urgently trying to persuade the US to exempt UK goods from higher tariffs. Education Secretary Bridget Phillipson admitted this change creates uncertainty for UK businesses. The government is engaging at the highest levels to ensure US understands UK’s national interests.

Analysis indicates it’s unclear whether the previously agreed 10% tariff will be implemented unless the US gives clear instructions; otherwise, the final rate could be 15%.

However, before the US attack on Iran at the end of February, US Treasury Secretary Janet Yellen hinted that the 15% global tariffs might soon take effect.

(3) Dovish Fed: The last UK rate decision on February 5 saw the BoE vote 5-4 to keep rates at 3.75%. The BoE also lowered the UK growth forecast for 2026 by 0.3 percentage points to 0.9%. Governor Bailey has indicated there’s room for rate cuts this year.

(4) UK-US tensions: With the Middle East conflict entering its 11th day, Trump has criticized the UK multiple times. Initially, the US refused to use UK bases for Iran operations, and later claimed it’s “serious about” deploying two aircraft carriers to the Middle East too late, saying “the US doesn’t need the UK to join a war it’s already winning.”

Trump also said the UK was once a great ally, perhaps the greatest among all allies. Soon after, the UK Ministry of Defence stated that the two carriers are on high alert, ready to deploy quickly, and US military operations in the Middle East are now using UK bases to prevent Iran from launching missiles.

The BoE has cut rates six times since August 2024, totaling 1.5%. However, the rate cuts have been sporadic: at the end of 2022, the Bank hesitated; in February 2023, it cut 0.25%; in March, rates held steady; in May, it cut again by 0.25%; June kept rates unchanged; August cut 0.25%; September and November held steady; December cut 0.25%, bringing the rate down to 3.75%.

Lastly, global oil prices remain closely watched. Bank of America warns that rising oil prices could prevent the Fed from turning hawkish. If oil shocks persist and US economic conditions worsen, the Fed may adopt a more dovish stance.

There are also reports that the International Energy Agency (IEA) has recommended releasing the largest-ever oil reserves, and G7 energy ministers (Canada, France, Germany, Italy, Japan, UK, US) discussed this yesterday. The US considers a joint release of 300-400 million barrels, but no decision has been announced.

BofA warns soaring oil prices may force the Fed to cut rates

Global daily oil demand is about 100 million barrels. If the Strait of Hormuz accounts for 20% of global exports, the amount of reserves needed to stabilize the market is limited.

To address oil shortages elsewhere, the US has temporarily exempted imports of Russian oil into India. However, India’s largest bank, SBI, is uncertain how long these exemptions will last and is reluctant to process related payments to avoid business and reputational risks.