Bank of England set to hold rates as Europe's central banks diverge from Fed

LONDON — The Bank of England is set to hold interest rates steady at its Thursday meeting, with traders expected to pore over the details of Governor Andrew Bailey's statement as anticipation builds for a potential summer rate cut.

The BOE's Monetary Policy Committee is widely expected to keep the Bank Rate at 5.25%, with an announcement due at midday.

The committee will assess data including U.K. inflation, which came in at 3.2% in March, slightly higher than consensus forecasts had suggested and still some way from the BOE's 2% target. Core inflation, which excludes energy, food, alcohol and tobacco, was 4.2%, while services inflation, an important metric for policymakers, was 6%.

Bailey has nonetheless stressed in recent weeks that he sees strong evidence that inflation is coming down as a result of tighter financial conditions.

Meanwhile, the headline rate of price rises is set to drop considerably in April due to a sharp year-on-year decline in energy prices, with some forecasts putting it below 2%.

Traders appear uncertain about a June rate cut, according to money market pricing, which puts the chance around 50-50. Bets have meanwhile increased on a first move in August, with a roughly 80% probability of a 25 basis point trim, and a total of 50 basis points of cuts this year.

Francesco Garzarelli, head of research at Eisler Capital, said investors would be paying attention to the split of votes on Thursday from the MPC's nine voting members for clues about the June meeting.

The latest March meeting saw eight votes to keep rates steady and one to cut.

"There's much more in the communication. Bailey's commentary will be important, and the outlook forecast," Garzarelli told CNBC's "Squawk Box Europe" on Thursday.

"There's also