Must read: Bank of England rate decision, BP, Diageo

There’s little sign of a summer lull on the news front with plenty for investors to get their teeth into. After the slew of tech earnings, US reporting season continues to dominate next week with the likes of Pfizer Inc (NYSE:PFE), Caterpillar Inc (NYSE:CAT), Uber Technologies Inc (NYSE:UBER), The Walt Disney Co (NYSE:DIS) and Eli Lilly and Co (NYSE:LLY) publishing quarterly results. 

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Closer to home, UK investors will be paying close attention to the Bank of England’s rate decision on Thursday, while earnings continue to trickle out including from FTSE 100 heavyweights like BP (LSE:BP.), Diageo (LSE:DGE), Glencore (LSE:GLEN) and Legal & General Group (LSE:LGEN). 

BANK OF ENGLAND RATE DECISION 

The Bank of England will decide on interest rates next Thursday, and expectations are for a quarter-point rate cut to 4%. Although the central bank kept rates unchanged at its previous decision meeting, the vote split was more divided than expected, with three Monetary Policy Committee (MPC) members voting in favour of a cut, highlighting the inconclusive picture of the economy painted by the data. In May, when the BoE last cut rates, there was an even greater split among MPC members.

There are clear signs of economic deterioration, particularly stemming from the labour market, that warrant a dovish stance. Yet policymakers must weigh this up against the risk of inflationary pressures particularly with rising food prices and international uncertainty around Trump’s tariffs and volatile energy markets. 

While next week’s cut is expected, looking further ahead it is unclear whether that’s it for 2025 or if there will be another cut in November. 

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Along with the decision, the Bank of England will release its August Monetary Policy Report. Focus will be on its projections with the potential for an increase to its inflationary forecasts.

The first half of the year was characterised by a clear uptrend for cable (GBP/USD), but that trade has reversed course since the start of July, with significant sterling selling and dollar buying. Over the past month, the pound has lost about 3.75% against the US dollar.

BP 

BP will deliver its second-quarter results on Tuesday 5 August. 

Weaker refining margins and lower volumes have been a mainstay of performance over recent quarters. The weakening macroeconomic backdrop and OPEC+’s strategy shift towards boosting production are expected to keep a lid on oil prices and are key headwinds for BP. 

Earlier this month, BP warned that its quarterly earnings will be weighed down by lower oil and gas prices. However, on a more positive note, BP raised its production guidance in July with expectations for an improvement in upstream output quarter-on-quarter. 

In the first quarter, BP reported underlying replacement cost profit of $1.38 billion, shy of forecasts for $1.53 billion. According to Refinitiv, that figure is expected to rise to $1.8 billion in the second quarter, although that represents a sharp drop from $2.8 billion in the same quarter last year. BP is guiding for average refining margins to increase to $21.1 a barrel from $15.2 a barrel in the first quarter. 

Oil trading will be in focus for BP after rival Shell reported a disappointing trading performance in the quarter - it struggled to deal with the speculative market volatility over the period. 

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All eyes will be on any changes to cash returns for shareholders after BP lowered its share buyback in April. The dividend will be closely watched – it has a punchy yield of 6% thanks to BP’s sheer scale that makes it an attractive stock within the income investor community. 

BP has been refocusing itself back towards oil and gas, shifting away from renewables in order to please investors and boost its share price. Higher interest rates and an unhospitable stance towards the green energy transition from the Trump administration have pushed energy companies like Shell, Equinor and BP back towards fossil fuels. Most recently, this was evidenced by a Bloomberg report last week to suggest that BP is abandoning a planned green hydrogen production facility in Australia. 

Shares in BP are flat so far in 2025 but are down around 12% over the past year. It has sharply underperformed rival Shell, with that discrepancy contributing to the takeover speculation last month that Shell denied. BP remains the underdog with Shell the preferred name by analysts. Shell has a buy recommendation whereas BP remains a hold.

DIAGEO 

Richard Hunter, Head of Markets, interactive investor says, “Diageo prepares to deliver its 2025 preliminary results on Tuesday 5 August. 

Diageo is not out of the woods yet by a fair margin, but the third-quarter update in May provided some glimmers of hope.

At that time, the effects of the tariffs were likely to cause an annualised hit of some $150 million on profits, although the group estimated that its mitigating actions, such as increasing prices, cost control and supply chain management will limit the damage. 

In the meantime, there was a mixed to positive performance across its geographies. Its largest market in North America enjoyed a 6.2% hike in sales, although the fact that some of this resulted from shipments being pulled forward ahead of the tariffs means that the coming update could be more challenging. 

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Concerns remain that consumers are trading down to cheaper alternatives, while the spectre of exponential growth in weight-loss drugs has led some to question the longer term effect on the sector.

Meanwhile, the Guinness brand continues its ascent, with growth across many of the group’s geographies and, perhaps unsurprisingly, in Europe in particular. This famous brand continues to enjoy double-digit growth, which has now been the case for some four years. The brand is estimated to be responsible for around two-thirds of beer sales for the group and for 12% of total revenue, and it appears that this jewel in the crown is one which Diageo is keen to protect.

The price decline has stabilised, although the scale of the challenges ahead is reflected in a share price which has fallen by 24% over the last year, and by 50% over the last three."