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SONIA Prices Just Over 40bp Of '24 Cuts Ahead Of BoE, Bank Reaction To Services CPI Eyed

STIR

GBP STIR markets are little changed ahead of today’s BoE decision.

  • BoE-dated OIS shows ~41.5bp of cuts through year end.
  • The first 25bp move is not fully discounted until the end of the Nov meeting, with just under 70% odds of a cut through the end of the Sep MPC currently showing.
  • SONIA futures are flat to -1.0 through the blues.
  • We believe that yesterday’s CPI data cements an unchanged 7-2 vote at today’s MPC decision, with rates set to be left unchanged.
  • Yesterday’s services CPI reading will present the major point of worry for the MPC, after it topped BoE and wider sell-side expectations.
  • We don’t think the data will provide a meaningful change to the BoE’s guidance/ overarching view, but that outcome cannot be completely ruled out.
BoE MeetingSONIA BoE-Dated OIS (%)Difference Vs. Current Effective SONIA Rate (bp)
Jun-245.210+1.0
Aug-245.129-7.1
Sep-245.027-17.3
Nov-244.882-31.8
Dec-244.783-41.7
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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