At the moment, the market agrees
A Bank of England hike is 90% priced in but the market is having some second thoughts. Cable is at a session low, down 15 pps to 1.3120 after touching as high as 1.3173. The reversal is mostly US dollar buying but it's also a warning ahead of the BOE.
Nordea doesn't think a hike is coming and even if it happens, they see cable selling on a dovish message.
"Ultimately, we think the MPC will vote to keep rates unchanged by a 5-4 margin, but the view hinges on a dovish revision of the projections by the BoE staff. The bottom-line is that we favour a short GBP position in to the meeting from a risk/reward perspective.Even a dovish hike could end up as a GBP negative event, given the current pricing of BoE."
They highlight Broadbent's comments last week but I'm not so sure I agree. They say Broadbent "indicated last week that he is yet to decide on whether to vote for a hike or not" but that doesn't capture the context of what he said. He was avoiding talk on monetary policy and told reporters that he wouldn't tell them if he had made up his mind.
In any case, here's their preview, which is interesting reading.
