Trade Idea: We believe that the current market pricing of rate cuts in UK is too conservative. The current 2-year UK Sonia Swap level at 4.54 is more of a result of elevated US yields than the correct representation of rate cut possibilities in UK. Our view has been further bolstered by the 9th May BOE meeting. Not only the status quo vote with 7-2 votes (with the influential Deputy Governor Ramsden joining vote for a cut) but Governor Bailey comments in the press conference was dovish compared to what markets expected. Hence, we recommend to add to receive positions on 2-year UK Sonia from 4.54. Stop loss being 4.8 and Take Profit around 4.04.
For detailed trade recommendation report, please read the below report in our trade recommendation section:
https://macro-spectrum.com/trade-recommendation/receive-2-yr-uk-sonia-swaps
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