The worsening economic data has been clear and will likely be clearly acknowledged by Governor Andrew Bailey in the press conference. We see this inevitable acknowledgement of weaker data and some evidence that the labour market conditions point to reduced wage inflation risks as helping to push yields lower.

The UK OIS curve has more potential to adjust lower further out – just 25 bps worth of cuts by September 2024 looks too conservative to us and a less hawkish communication on Thursday could push yields at the back end of next year lower – leading to some further GBP underperformance.

For GBP/USD, the October low of 1.2037 will be the key support level.