The Bank of England has found itself caught in the middle of a trans-Atlantic divide over who will cut interest rates first, with costly implications for gilt traders and British political leaders counting on election year relief from high borrowing costs.

On one side are City of London economists and BOE Governor Andrew Bailey who say the UK’s outlook seems more like the European Central Bank’s. On the other are investors, who are betting the BOE’s path to rate cuts more closely resembles the Federal Reserve as they rapidly unwind expectations for easing in the US this year. Only one can be right.