Goldman Sachs expect a Bank of England 25bp rate cut in August (previously tipping June)

While the UK PM has leapt into action to call an early election:

• UK’s Sunak calls a national election on July 4 as per earlier reports

He may have jumped from the frying pan into the fire. Goldman Sachs is tipping no help for Sunak from the Bank of England, changing its forecast from a June rate cut to August now.

• Given firmer incoming price and wage data, we no longer expect a June Bank Rate cut.

• First, services inflation came in at 5.9% year-on-year in April, well ahead of consensus expectations and the MPC‘s May projection of 5.5% year-on-year.

GS are not alone in switching away from a June forecast.

• Hotter UK inflation chills BoE June rate cut prospects – base case cut August

I’m digging out more on this.

ICYMI, the UK inflation data is here from earlier this week:

• UK April CPI +2.3% vs +2.1% y/y expected
• Sterling gains as UK inflation slows by less than anticipated
• Traders move to pare back BOE rate cuts odds after UK CPI report

This article was written by Eamonn Sheridan at www.forexlive.com.