Persistent inflationary pressures from elevated energy prices, driven by Middle East conflict escalation, have shifted trader consensus toward a 70% implied probability of a Bank of England rate hike in 2026. March 2026 CPI rising to 3.3% prompted the Monetary Policy Committee to hold Bank Rate steady at 3.75% in its April decision, with one member dissenting in favor of an immediate 25 basis point increase amid concerns over second-round wage and price effects. Market-implied forward curves now embed a higher path for policy rates through 2027, reflecting tightened financial conditions and revised economic projections that prioritize returning inflation sustainably to the 2% target. Key near-term catalysts include the June 18 MPC meeting and April CPI data, which could further influence expectations if energy shocks persist.