The Bank's Monetary Policy Committee gives its decision at midday, with most in the City expecting another quarter-point cut. This would take rates to 5.75 per cent, their lowest for almost three years.
Fresh evidence yesterday of weak retail spending and a slowdown in the service sector strengthened the case for further cuts, said City analysts. The speculation sent sterling lower against the euro: the pound weakened 0.28p to 69.26p.
The Confederation of British Industry's monthly distributive trades survey was weaker than anticipated, with 38 per cent of retailers saying sales in January were lower than a year ago, while 29 per cent said sales were higher. Alastair Eperon of the CBI said: "The drop in volumes in January dashed hopes of a lift from new year sales activity."
The monthly Chartered Institute of Purchasing and Supply (CIPS) report on services found that the sector shrank in January for the third successive month.
CIPS said the benchmark purchasing managers' index (PMI) registered 48.6 in January, compared to 47.4 in December. Any PMI reading below 50 indicates the sector is contracting.
However, the increase in the index between December and January suggests that the rate of contraction is slowing.
Several analysts cautioned against reading too much into the surveys, which tend to fluctuate markedly from month to month.