Bucking the growing trend of knocking back rate hike expectations, Allan Monks at JPM says that falling employment, stronger wage growth and reflation in 2H 2015 should help ease the Bank of England’s risk worries.

He’s citing the Taylor rule which is supposed to define rates to changes in the economy from inflation and output and says that if core inflation stabilises and starts to head up again the case for higher rates will be strengthened.

He expects rates to start going up at the end of the year.

The market is going to be caught massively on the wrong side of the long pound trade if the economy picks up in the first half of the year leading to the prospect of higher rates sooner than expected. It’s a trade I’m waiting on myself and I’m already playing it against the euro. Cable will be the next one to get on once the US picture on rates becomes clear.