BoE’s MPC has not given the market a clear conclusion of what the budget could mean for the economy, and once again there is no strong guidance on how fast rates can be cut, ING’s FX analyst Francesco Pesole notes.

December rate cut is looking rather unlikely

“Our house view on the BoE has been tweaked but not radically changed. A December rate cut is looking rather unlikely following the budget, and markets are also pricing in a very small implied probability. At the same time, we don’t think the budget will significantly derail the BoE’s easing path next year, and we still expect faster cuts in the spring compared to market expectations.”

“Accordingly, we think there is a gap to be filled on the dovish side in the Sonia curve. Such repricing may however take some time to show, and the rate/growth differential with the eurozone means there should be continued resistance on a substantial shift higher in EUR/GBP.”