SONIA Stabilises Around 60bp Of '24 BoE Cuts, Macro Dominates Domestic Matters

Some will suggest that the dovish GBP STIR repricing through year end has become stretched.

• ~17bp of cuts are priced into BoE-dated OIS through the Bank’s September decision, with a cumulative ~60bp of easing showing through the Dec MPC.
• Those touting stretched moves will be comparing market pricing to the nature of last week’s “hawkish” BoE rate cut and lack of commitment to further imminent easing in several rounds of post-meeting MPC communique.
• We note that the latest round of dovish repricing is macro driven, with economic uncertainty in the U.S. and pricing of potential intra-meeting Fed action dominating.
• This means broader market sentiment and offshore matters will likely remain at the fore in the very immediate term, particularly with the next BoE decision not due until September 19 and with no tier 1 UK data due this week.
• Next week will see the monthly UK CPI & labour market data cross, reintroducing some local impetus.