[MARKET UPDATE] Modest dovish reaction in BoE pricing following the unemployment/wage data, next cut remains priced in April but March is up to -21bps (pre-release -20.3bps). Timing for a 2nd 2026 cut brought forward to Nov. (pre-release Dec.)

• We await Wednesday's CPI data before the final call on March vs April can be made.
• In short, the morning's data had a clear dovish skew, as the unemployment rate continues to tick up (though the BoE does forecast this) and the wage metrics both moderated from the prior rate, with the incl. bonus figure markedly cooler.

BoE Pricing

• Mar -20.8bps (prev.-20.3bp)
• April -27.4bps (prev. -26.3bps)
• Jun -38bps (prev. -35.6bps)
• Nov -51bps
• Dec -50bps (prev. -50.6bps)

The Bank of England's pricing reflects a modest dovish shift following the latest unemployment and wage data, suggesting that the market anticipates a rate cut in April, though a reduction in March is also being considered. With unemployment rising and wage growth moderating, the data reinforces expectations of a more accommodative stance from the BoE, which could influence GBP and bond markets ahead of the upcoming CPI release.