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Analysts at TD Securities believe that the Bank of England took a dovish turn, as it now needs to also see “some recovery in global growth,” on top of a smooth Brexit transition, in order to raise rates in the future.

Key Quotes

“Even in the event of a smooth transition though, the Bank’s forecasts suggest that it wouldn’t need to raise rates more than once over the next three years in order to see inflation reach the 2.0% target.”

“The BoE’s incremental dovish step keeps our focus on further downside risks for sterling, but GBP has already weakened significantly in recent days. We think GBP may stabilize a bit near-term, but rallies look likely to be sold as investors seek better levels to enter or add to existing GBP shorts.”

“As expected, the BoE rhetoric was cautious and contingent on the outcome of Brexit. However, in the rates space, the overall reaction was relatively muted. From a tactical perspective, we favour receiving white/reds contracts amid the ongoing uncertainty. Further out the curve, we remain biased towards a flatter 5s30s curve.”