Light Dovish Move For GBP STIRs On CAD CPI, Bailey & CPI Up Next

Light dovish moves for GBP STIRs seem to be driven by spill over surrounding the CAD CPI data.

• That leaves SONIA futures -0.5 to +5.0 through the blues.
• Meanwhile, BoE-dated OIS shows 11.5bp of cuts through June and ~54bp of easing through year end, little changed on the day.
• Solid demand for the latest 20-Year gilt auction and another moderation in the Kantar supermarket inflation metric provided domestic support for wider UK rates this morning.
• A reminder that BoE Governor Bailey will speak at 18:00 London, we have covered that in detail on several occasions today.
• Looking only slightly further out, the MNI markets team thinks that Wednesday's CPI print will be the most important single indicator determining whether the BoE cuts rates in June or remains on hold (likely until August).
• We think if the data is broadly in line with expectations, the probability of a cut will increase (and this will also impact the probability of further cuts down the curve).
• With markets still pricing just under a 50/50 chance of a June first cut, we would expect to see a decent market reaction to either a higher or lower-than-expected services CPI print.
• Click for our full CPI preview.