Some Short-Term Limits To Further Dovish BoE Repricing

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.

Source: MNI - Market News/Bloomberg. 2025 meeting dates are estimated.