UK: Brief Starmer-Streeting Meeting Raises Questions

Of note:

EURUSD 1.38bn at 1.1700 (could act as magnet).

EURUSD 1.43bn at 1.1700 (tue).

AUDUSD 1.35bn at 0.7125 (wed).

USDJPY ~1bn at 160.00 (wed).

USDCNY 1.26bn at 6.8660 (thu).

EURUSD 1.25bn at 1.1700 (fri).

USDZAR 1.62bn at 16.5000 (fri).

• EURUSD: 1.1650 (1.18bn), 1.1670 (449mln), 1.1690 (227mln), 1.1700 (1.38bn), 1.1720 (467mln).
• GBPUSD: 1.3435 (375mln), 1.3455 (450mln).
• USDJPY: 159.50 (649mln), 160.00 (530mln).
• USDCAD: 1.3855 (361mln), 1.3875 (286mln), 1.3900 (905mln).
• AUDUSD: 0.7050 (711mln).

This week there is likely to be far more focus on MPC speakers than domestic UK data releases (with the REC jobs report overnight, BRC retail sales coming tonight and monthly activity including Feb GDP on Thursday).

• There will be six MPC speakers and markets will be looking for an interpretation of how close any of these members are to voting for a hike. Note that we sorted the main comments from hawkish to dovish in our latest BOE Review: One Crisis After Another on pages 3-4.
• Governor Bailey's comments will likely be most pertinent for markets, after his recent Reuters interview in which he alluded to market pricing for hikes getting ahead of itself. He is due to hold a fireside chat moderated by fellow MPC member Alan Taylor tomorrow (with the text to be published at 17:05BST). Any further reference to market pricing or waiting for more information will be key here. Governor Bailey is due to speak again twice on Wednesday on stablecoins (16:50BST) and on a panel on "Global imbalances: policy priorities" at 19:00BST. The former is unlikely to be too important for macro markets while he is unlikely to say more in the latter than at his Tuesday speech.
• The other key events to watch will be: 1) A fireside chat Mann tomorrow (9:50BST) - the most likely MPC member to vote for a hike in our view.
• 2) Greene speech at the Atlantic Council entitled "Markets, inflation and more" at 15:00BST tomorrow (her comments were towards the centre of the MPC in terms of hawkishness in the March MPC meeting so her vote would likely be needed for a hike).
• 3) Pill on Friday (13:00BST) at a Barclays breakfast roundtable. Again his vote would likely be needed for a hike. We judged his March paragraph to be marginally more hawkish than Greene, so again he would likely need to be on board for a hike.
• Outside of these key speeches, we will hear from Breeden on Friday at 10:00BST - but on financial stability rather than on monetary policy. And we will also hear from Taylor today at 14:00BST and on Thursday at both 16:40BST and 20:00BST (as well as moderating Bailey's appearance tomorrow). Taylor's view is that hikes are not needed imminently - and as the most dovish MPC member we don't think these will be too market moving, despite the Thursday 16:40BST event being a panel on "monetary policy challenges".
• As we noted earlier, next week's data will give the April MPC meeting a huge amount of extra information as we receive March CPI, an extra labour market report as well as the flash PMI survey, the DMP survey and the BOE's Agents' Survey. We think that the latter two are probably most important here while the initial impact of higher fuel prices in March CPI will also be watched closely.

Speaking to BBC Radio 5 Live, PM Sir Keir Starmer says that it is "vital to get the Strait of Hormuz open". Says the UK is not supporting the US' blockade of the Strait. Sir Keir: "Whatever the pressure, no matter the circumstances, we are not getting dragged into the war." Earlier, US President Donald Trump posted on Truth Social, "The United States to Blockade Ships Entering or Exiting Iranian Ports on April 13 at 10:00 A.M. ET. [15:00BST, 16:00CET] Thank you for your attention to this matter! President DJT". 

• In an interview with Fox News following the announcement of the blockade, Trump had claimed that "I understand the UK and a couple of other countries are sending minesweepers," to the Straits of Hormuz. The BBC reports that "British naval ships and soldiers will not be used to block Iranian ports, while UK minesweepers and anti-drone capabilities will continue operating in the region."
• Chancellor of the Exchequer Rachel Reeves travels to Washington, D.C., today for the IMF/World Bank Spring Meetings, with the situation around the Straits almost certain to be of crucial interest to national finance ministers and central bank governors.