The GBP rates case is heating up again as both price plans- and wages are probably re-accelerating. Have markets completely mispriced the GBP rates case? It feels VERY reminiscent of late Q4 in the USD rates space.
UK Inflation Watch: A dovish surprise upcoming
The early consensus for UK inflation next week looks relatively hot given typically benign patterns in March, which are likely underpinned by the Early easter timing. We see a downside surprise of roughly 10-12 bps to consensus.
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Something for your Espresso: Might need a Bailey in the Espresso this morning..
The Bank of England is caught between a rock and a hard place, and it may be prudent to pour a bit of Bailey in the Espresso for the committee this morning. A 50 bp hike would signal panic, while delivering 25 bp risks jeopardizing the GBP.
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