UK rates market is pricing in something big by the BOE this month - or maybe even sooner?
An almost 40 bps rate cut is being priced in ahead of the March BOE meeting
The OIS market is currently pricing rates to be at ~0.32% for the BOE ahead of its 26 March policy meeting, which is basically a near 40 bps rate cut considering that the effective overnight bank rate currently is ~0.71%.
It has been quite the dramatic fall over the past few days considering the hints dropped by the BOE as well as the Fed decision yesterday.
At this stage, the market is trying to settle the debate of how much the BOE will cut and not if the BOE will cut this month. Then, there is also a question of when. If the Fed can pull something off like what we saw yesterday, who is to say that the BOE might not?
Just be mindful of this as well if you're trading the pound over the next few weeks.