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Dovish Moves In BoE Pricing On U.S. Data, 45bp Of ’24 BoE Cuts Priced

STIR
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The softer-than-expected U.S. labour market and ISM services data has also had a dovish impact on GBP STIRs, but SONIA futures and BoE-dated OIS fail to get anywhere near challenging their post-June BoE dovish extremes.

  • ~45bp of cuts are priced through year end, vs. extremes of ~51bp seen on June 21 (the day that followed the latest BoE decision).
  • Further forwards, greater than even odds of a 25bp cut are still priced in for the Aug MPC (~14bp).
  • SONIA futures trade at/just off fresh session highs, 0.5-7.5 firmer on the day, with the pre-U.S. data weakness more than reversed.
  • Beyond tomorrow’s election, UK focus is set to fall on the initial round of post-election BoE appearances, with Pill, Haskel and Mann all scheduled for next week. We also note heightened potential for additional BoE media appearances as the pre-election blackout period passes.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Aug-245.059-14.2
Sep-244.987-21.3
Nov-244.842-35.8
Dec-244.749-45.1
Feb-254.618-58.2
Mar-254.532-66.8
May-254.413-78.7
Jun-254.331-86.9
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The softer-than-expected U.S. labour market and ISM services data has also had a dovish impact on GBP STIRs, but SONIA futures and BoE-dated OIS fail to get anywhere near challenging their post-June BoE dovish extremes.

  • ~45bp of cuts are priced through year end, vs. extremes of ~51bp seen on June 21 (the day that followed the latest BoE decision).
  • Further forwards, greater than even odds of a 25bp cut are still priced in for the Aug MPC (~14bp).
  • SONIA futures trade at/just off fresh session highs, 0.5-7.5 firmer on the day, with the pre-U.S. data weakness more than reversed.
  • Beyond tomorrow’s election, UK focus is set to fall on the initial round of post-election BoE appearances, with Pill, Haskel and Mann all scheduled for next week. We also note heightened potential for additional BoE media appearances as the pre-election blackout period passes.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Aug-245.059-14.2
Sep-244.987-21.3
Nov-244.842-35.8
Dec-244.749-45.1
Feb-254.618-58.2
Mar-254.532-66.8
May-254.413-78.7
Jun-254.331-86.9