Traders have sharply reduced expectations for Bank of England interest-rate cuts, pricing in less than a 50% chance of a quarter-point reduction to 3.5% this month. The probability of two cuts this year has also fallen dramatically. These shifts come after energy prices soared following a military attack on Qatar's liquefied natural gas production.

European gas prices jumped 50% in the wake of the Qatar shutdown, while oil prices surged sharply. The market's rapid reassessment reflects growing inflation fears as soaring energy costs threaten to keep price pressures elevated. Traders now see far less likelihood of monetary easing from the BOE in the near term.

This dramatic shift in market expectations underscores how quickly geopolitical events can reshape central bank policy outlooks. The reduced odds of rate cuts suggest traders now believe the BOE will maintain a tighter monetary stance to combat inflation risks, rather than pursuing the easing cycle many had anticipated just last week.