Traders have increased bets on Bank of England rate hikes, pricing in 62 basis points of tightening this year, reflecting stronger expectations for monetary policy tightening. The shift is driven by persistent UK inflationary pressures and resilient economic data, which are tightening rate differentials relative to the ECB and supporting GBP. Gilt yields have risen in response, with two-year yields particularly sensitive as they are more exposed to near-term policy expectations. Short-dated sterling interest rate swaps and BOE futures are the most directly impacted instruments, seeing elevated volumes and tighter pricing. Traders will focus on the upcoming CPI release and the next MPC meeting minutes for signals on whether the hawkish repricing is justified.
TRADERS BOOST BOE RATE HIKE BETS, PRICE 62BPS THIS YEAR
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