June 24, 2024 13:54 GMT
Some Short-Term Limits To Further Dovish BoE Repricing
STIR
GBP STIRs reflect greater odds of a rate cut at the BoE’s August meeting vs. pre-June MPC levels, with ~14.5bps cuts priced through Aug, ~21.5bp through Sep and ~46.5bp through year end.
- Any extension of the recent dovish repricing is probably contingent on a handful of factors, which could mean that markets struggle to push meaningfully beyond pricing 50-55bp of ’24 cuts in the next couple of weeks (~51bp represents last week's dovish extreme for Dec '24 BoE -dated OIS).
- Data - we don’t have any significant UK releases until the BoE’s DMP survey (July 4), while last week’s MPC decision de-emphasised data, in our view.
- BoE speeches - the Bank is in an election-related blackout through July 4.
- Cross-market pricing - particular focus on the Fed.
- Note that all of the sell-side analyst comments covered in our BoE review look for a cut in August.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Aug-24 | 5.057 | -14.3 |
| Sep-24 | 4.986 | -21.4 |
| Nov-24 | 4.832 | -36.8 |
| Dec-24 | 4.735 | -46.5 |
| Feb-25 | 4.593 | -60.7 |
| Mar-25 | 4.497 | -70.3 |
| May-25 | 4.372 | -82.8 |
| Jun-25 | 4.263 | -93.7 |
Source: MNI - Market News/Bloomberg. 2025 meeting dates are estimated.
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