Is Downing Street far-sighted or playing with fire? - ING
*In the UK the focus is very much on the full re-opening of the economy despite rising case numbers. Here the government thinks the link between getting Covid-19 and hospitalizations has been broken by the vaccines. UK activity data is actually softening a little now, but full-year growth is still seen near 6.5%.
*BoE Governor Bailey has poured cold water on early rate hike ideas. The first 10bp BoE hike is now priced for summer 2022 and the first full 25bp hike by March 2023. That may still be a little too soon.
*We think GBP can hold onto its gains but do note event risks in September when: i) unemployment could rise when furlough ends and ii) N. Ireland friction could resume with the EU.
*BoE Governor Bailey has poured cold water on early rate hike ideas. The first 10bp BoE hike is now priced for summer 2022 and the first full 25bp hike by March 2023. That may still be a little too soon.
*We think GBP can hold onto its gains but do note event risks in September when: i) unemployment could rise when furlough ends and ii) N. Ireland friction could resume with the EU.