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Hike Pricing Slightly Firmer Ahead Of Thursday's BoE Decision

STIR

ECB and BoE hike pricing was minimally firmer to start August, with the next catalyst likely to be the latter's rate decision in two days' time.

  • ECB terminal depo Rate pricing +0.9bp to 3.91% (16bp of further hikes left in the cycle to Dec 2023). Mixed but weak Italian and Spanish PMIs, alongside better-than-expected Eurozone / German jobs data, did little to change the ECB narrative: just over 9bp of a hike is priced for September, little better than a 33% probability of a quarter-point hike.
  • BoE terminal Bank Rate pricing +1bp to 5.87% (87bp of further hikes left in the cycle to Mar 2024). 33bp of tightening is priced for Thursday's BoE decision (our preview will be out Wednesday morning) - roughly one-in-three probability of a 50bp vs a 25bp raise implied. 59bp is cumulatively priced through the coming two meetings.

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