STIR: Just Under 50bp Of BoE Cuts Priced Through Year-End
Modest hawkish adjustments in GBP STIRs following the upside surprise in the (volatile) retail sales data. Details provided in earlier bullets.
- BoE-dated OIS contracts little changed to 2bp more hawkish across ’25 meetings.
- 49bp of cuts now showing through year-end, with 19bp of easing showing through May (when we expect the next cut to be deployed) and ~25bp of easing priced through June.
- ~56bp of cuts were priced through year-end at last Friday’s close, with this week’s run of UK labour market, inflation and retail sales data factoring into the hawkish adjustment seen since then.
- Overall, we don't think there is a huge amount in this week’s data to change the mind of either the doves or central group on the MPC.
- SONIA futures flat to -2.0.
- Flash PMI data headlines the macro calendar today, with the UK readings set to be released at 09:30 GMT.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Mar-25 | 4.452 | -0.2 |
May-25 | 4.267 | -18.8 |
Jun-25 | 4.203 | -25.2 |
Aug-25 | 4.074 | -38.0 |
Sep-25 | 4.043 | -41.1 |
Nov-25 | 3.980 | -47.5 |
Dec-25 | 3.965 | -49.0 |
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AUDUSD TECHS: Trend Structure Remains Bearish
- RES 4: 0.6429 High Dec 12
- RES 3: 0.6384 High Dec 13
- RES 2: 0.6331 50-day EMA
- RES 1: 0.6302 High Jan 6
- PRICE: 0.6262 @ 07:40 GMT Jan 22
- SUP 1: 0.6131 Low Jan 13 and the bear trigger
- SUP 3: 0.6100 Round number support
- SUP 3: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 4: 0.5994 1.618proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and short-term gains are considered corrective. The pair has recently breached 0.6179, Dec 31 low, maintaining the price sequence of lower lows and lower highs. Moving average studies are in a bear-mode position too. A resumption of the downtrend would open 0.6100. The next resistance to watch is 0.6331, the 50-day EMA.
STIR: Just Under 65bp Of BoE Cuts Priced Through Year-End, Reeves Due
GBP STIRs little changed to a touch more hawkish at the open, with core global FI markets below yesterday’s highs and Bund futures off their early London peak.
- BoE-dated OIS flat to 1bp more hawkish across ’25 contracts.
- SONIA futures flat to -1.5.
- UK Chancellor Reeves is currently speaking on BBG TV, nothing to move markets thus far, as she reemphasises the government’s strapline surrounding driving economic growth and the need to stick to the fiscal rules.
- She will speak to CEOs later in the day.
- PSNB was higher than expected in Dec.
- Little else of note on the UK calendar today.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Feb-25 | 4.477 | -22.3 |
Mar-25 | 4.433 | -26.7 |
May-25 | 4.297 | -40.3 |
Jun-25 | 4.244 | -45.6 |
Aug-25 | 4.155 | -54.5 |
Sep-25 | 4.130 | -57.0 |
Nov-25 | 4.079 | -62.1 |
Dec-25 | 4.062 | -63.8 |
USD: Trades in the green against all G10s
- The Dollar is on the front foot going into the European session following report last night that Trump is looking to put a 10% Tariff on China's Imports, as such the Kiwi and the Aussie have been the worst performers in G10s, but overall it has been a very volatile two way price action in FX.
- The NZDUSD is trading in a wide 0.5597/0.5689 range just this Week, and sits nearer Yesterday's mid range of 0.5617/0.5681, at 0.5656 this Morning.
- The normally Volatile Yen has been more stable overnight, and while USDJPY edges towards the Overnight high, Yesterday's printed high stands at 156.58, so far 155.99 is Today's session high.
- Market Participants are focussed on the expected BoJ hike due on Friday.
