VIEW: Nomura Flag Risk Of No Move In Rates From BoE Tomorrow, Stay Short GBP/USD

Nomura note that “UK CPI inflation came in at 6.7% this morning which was meaningfully lower than expectations (Nomura 7.1%, consensus 7.0%). Services inflation fell from 7.4% to 6.8% versus our forecast of 7.4% - a 0.6pp downside miss.”

• “This was always going to be an important UK CPI figure immediately ahead of tomorrow’s Bank of England meeting - after all, remember what happened in June when the May print came out super-strong and the BoE hiked by 50bp rather than the 25bp that had been expected.”
• “Now we have exactly the opposite situation – might a huge downside miss stop the Bank of England out from another hike? This is now a very real risk indeed, especially with pretty much all the data we’ve seen between the Aug and Sep MPC meetings being weaker (you can pretty much count on one hand how many data releases have been better over the last month and a half).”
• On the markets side, their sales team note that they recommend remaining short GBP/USD, looking for $1.22.