What's priced in for the BOE ahead of the UK CPI report?
The probability priced in for a rate cut in August is ~49%, according to the OIS market. Meanwhile, there's roughly 50 bps of rate cuts priced in by year-end. It's definitely a close call and if the BOE doesn't move in August, traders are still expecting them to at least move in September. The odds of that is seen at ~89% currently.Given the state of play, a notable miss on the inflation numbers later could very well see traders move to price in a move in August instead. But the opposite will also be a consideration if the inflation numbers prove to be much stickier than anticipated. The key numbers to watch will be the core figure and services inflation. This article was written by Justin Low at www.forexlive.com.
The probability priced in for a rate cut in August is ~49%, according to the OIS market. Meanwhile, there's roughly 50 bps of rate cuts priced in by year-end. It's definitely a close call and if the BOE doesn't move in August, traders are still expecting them to at least move in September. The odds of that is seen at ~89% currently.
Given the state of play, a notable miss on the inflation numbers later could very well see traders move to price in a move in August instead. But the opposite will also be a consideration if the inflation numbers prove to be much stickier than anticipated. The key numbers to watch will be the core figure and services inflation. This article was written by Justin Low at www.forexlive.com.
