###POV: ALL GO FOR AUGUST RATE HIKE? - Market....>

UK: ###POV: ALL GO FOR AUGUST RATE HIKE?

- Market pricing for a BoE rate hike has edged higher (72% vs 64%) following UK

service PMI for June, with overall Q2 PMIs indicating growth at 0.4% q/q

according to IHS/Markit, in-line with BoE forecasts. While average prices

charged for goods & services showed the sharpest increase for 3-months.

- Having been out favour for over 1-year, MPC members appear to be putting more

weight back onto PMI data, and the improvement in June could help persuade

enough members to back a rate hike in August.

- Looking at latest MPC comments, Dave Ramsden, Silvana Tenreyro and Gertjan

Vlieghe are seen the most likely to go for a rate hike as growth looks to be

in-line with May forecasts and CPI could be on the rise again after a pause.

- Ramsden said last month signs are that growth is to rebound in Q2 and could

exceed its speed limit (1.5%), while Tenreyro said costs of delaying a hike were

marginal, but postponing much longer was risky and likely lead to CPI overshoot.

- Risk is that hard data released w/b Jul 16 shows weak jobs/wage growth and

continue fall in CPI. While BoE Governor Carney is due to speak tomorrow.