Following the split call on this month’s rate cut, we feel it’s improbable the BOE will want to move again until they get further clarity around the UK’s economy. Our preferred scenario is that the 2s will ultimately test the 3% area, which implies further rate cuts and a soft UK economy, but this will take time. Note that the current official BOE rate is 4%, the same as the 2s.
- We believe the UK 2s are likely to hover around 4%, and another rate cut is not expected until the first quarter of 2026.
MM is neutral towards UK 2-year Gilts short-term
