STIR: BoE Pricing Steady, Market Still Shows Less Than 50bp Of Cuts through Dec
Some modest hawkish adjustments in GBP STIRs this morning, with Bunds edging lower, erasing their Asia-Pac uptick.
- Little in the way of headlines to note to drive the pullback, with the most prominent UK stories being a removal of some calls for September BoE rate cuts from sell-side forecasts.
- SONIA futures 0.5-3.5 lower.
- BoE-dated OIS essentially flat, pricing over 80% odds of a cut in August, 25bp of easing through September, 40bp through November and 46bp through year-end.
- Our base case still leans towards 2x 25bp cuts through year-end, tethered to the QIR meetings (August & November).
- Despite this week's labour market data being a bit better than the market expected, it's still probably net-net marginally softer than it was at the time of the June meeting. That, coupled with recent comments from Governor Bailey and pre-existing voting patterns/comments within the MPC, still points to an August cut, in our view.
- Little of note on the UK calendar ahead of the weekend, with macro focus on Fedspeak and U.S. UoM data.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Aug-25 | 4.003 | -21.4 |
Sep-25 | 3.966 | -25.1 |
Nov-25 | 3.819 | -39.8 |
Dec-25 | 3.756 | -46.1 |
Feb-26 | 3.642 | -57.5 |
Mar-26 | 3.614 | -60.3 |
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STIR: GBP Markets Look Through CPI, 48bp BoE Cuts Priced Through Dec
GBP STIR markets are little changed in the wake of the previously detailed inflation data (firmer headline, softer services Y/Y CPI).
- Overall, we think the MPC will view this release as broadly in line with expectations, although the Committee will likely be concerned about the continued rise in food prices.
- BoE-dated OIS 0.5-1.5bp more hawkish through ’25 meetings, with 48bp of cuts showing through year-end and the next 25bp cut essentially fully discounted through the end of the September MPC.
- SONIA futures flat to +1.5.
- Our full preview of tomorrow’s BoE decision is available here.
- Expectations point towards a 7-2 vote split with both Dhingra and Taylor likely to follow up their votes for a 50bp cut in May with a vote for a sequential cut (the magnitude of which is unlikely to elicit a market reaction).
- The main focus is on whether the dataflow has been enough to convince any other members of the MPC to vote for a cut.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Jun-25 | 4.211 | -0.4 |
Aug-25 | 4.025 | -19.0 |
Sep-25 | 3.969 | -24.6 |
Nov-25 | 3.818 | -39.6 |
Dec-25 | 3.736 | -47.9 |
Feb-26 | 3.619 | -59.6 |
Mar-26 | 3.587 | -62.8 |
USD: Extending losses into the European session
- The Dollar extends further lows as Europe joins the trading session, the Pound continues to extend gains, with the bid emerging following the UK Inflation Data, although the released seemed to be closer to inline Overall.
- The Dollar is more than likely playing a part, especially when looking at G10 currencies, the GBP is far from being the best performer.
- The AUD and the Kiwi are leading, up 0.54% and 0.42% respectively, Cable is only up 0.28%.
- Some report of short cover, and some recovery off the intraday lows in Equities have been supportive of the AUD and NZD, and In Terms of pure early Technical, the closest one is in the AUDUSD at 0.6552 High June 16, but this is still 38 pips away from today's 0.6514 printed high.
EQUITY TECHS: E-MINI S&P: (U5) Trend Structure Remains Bullish
- RES 4: 6200.00 1.500 proj of the Apr 7 - 10 - 21 price swing
- RES 3: 6172.50 High Feb 24
- RES 2: 6134.00 High Feb 26
- RES 1: 6128.75 High Jun 11 and the bull trigger
- PRICE: 6053.25 @ 07:27 BST Jun 18
- SUP 1: 5979.00/5896.83 Low Jun 13 / 50-day EMA
- SUP 2:5811.50 Low May 23
- SUP 3: 5645.75 Low May 7
- SUP 4: 5500.00 Low Apr 30
The trend condition in S&P E-Minis remains bullish and the contract is holding on to the bulk of its recent gains. For now, the most recent pullback is considered corrective. The contract has pierced support at 6003.83, the 20-day EMA. A clear breach of this average would expose the 50-day EMA, at 5896.83. Key short-term resistance has been defined at 6128.75, the Jun 11 high.
