CNH: USD/CNH Nears '25 Low After Trump-Xi Call News

The confirmation from both sides that a UK-India trade deal has been finalised could provide something of a boost to British PM Sir Keir Starmer's gov't. While the signing of a trade pact is unlikely to be reflected in opinion polling, it will allow the gov't to argue that its trade policy is working amid an increasingly fragmented global trading landscape. The agreement is the most sizeable trade deal entered into by the UK since it left the European Union, with one of the reasons touted for leaving the Union by pro-Brexiteers in 2016 being the ability for the UK to negotiate trade deals on a bilateral basis, rather than as part of a slow Brussels-directed process. 

• A UK gov't press release claims that as part of the agreement, "Indian tariffs will be slashed, locking in reductions on 90% of tariff lines, with 85% of these becoming fully tariff-free within a decade. Whisky and gin tariffs will be halved from 150% to 75% before reducing to 40% by year ten of the deal, while automotive tariffs will go from over 100% to 10% under a quota."
• Reaching trade deals with India has been a high priority for major Western economies, including the US and EU, as they look to bolster economic links with the world's most-populous nation. Earlier, Indian Finance Minister Nirmala Sitharaman said that securing an FTA with the EU was a 'top priority' for the gov't of PM Narendra Modi., 

More large Options in Equities, this time in the Bank index:

• SX7E (15th May) 185/190cs, bought for 2.65 and 2.70 in ~37.2k.

Little in the way of meaningful movement in GBP STIRs today, with modest swings generally driven by offshore inputs and catch up after the long UK weekend.

• BoE-dated OIS shows ~93.5bp of cuts through year-end after printing around 88.5bp at one stage today and over 100bp last week.
• A 25bp cut come the end of this week’s decision remains fully discounted.
• Contracts covering ’25 BoE meetings are little changed to ~2bp more dovish on the day.
• SONIA futures twist steepen on the day, +1.0 to -5.0.
• Thursday’s BoE monetary policy decision headlines the UK calendar this week.
• We expect a 25bp cut, in line with market pricing and all sell-side views we have read.
• We have outlined some potential dovish tweaks to the Bank’s guidance verses in the statement, which could pave the way for consecutive rate cuts over the next 3 meetings.