BoE: Another dovish step? – TDS

Analysts at TD Securities are looking for the BoE to take another dovish step, replacing its hiking bias with two-way risks.

Key Quotes

“GDP and CPI revised lower should signal that the BoE is not opposed to markets pricing in some chance of a rate cut in 2020.”

“Rates: Front-end is pricing around 10bps in policy cuts by Aug 2020. Political uncertainty suggests that markets may be under-pricing rate cuts in the very front-end contracts. Thus, we do hold a steepening bias for short sterling contracts.”

“FX: With investors focused on UK election risks, we think the bar is high for GBP to register a big reaction to this month's MPC. Our moderately dovish base case points to some modest downside risks for sterling on the day, but we expect broad ranges to remain in place.”