A Bank of England speaker will discuss liquidity and the upcoming June CPI release in the UK.
by VT Markets
/
Jul 16, 2025
The UK will release its inflation data for June at 2:00 AM US Eastern Time (6:00 AM GMT). The Consumer Price Index (CPI) is expected to stay steady, giving us a look at inflation trends in the country.
Nathanaël Benjamin, the Executive Director of Financial Stability Strategy at the Bank of England, will speak at the OMFIF Economic and Monetary Policy Institute. His talk is titled ‘Getting Liquidity where it is Needed.’
UK Inflation Data
We are paying close attention to the upcoming UK inflation data because the market is ready for a big change. The headline consumer price index is predicted to drop from 8.7% to 8.2%. However, the real focus is on the core inflation number, which is expected to remain high at 7.1%. Any variation from these figures could lead to significant market activity.
If the data shows higher inflation than expected, it will support the market’s belief that the Bank of England’s interest rate may peak above 6% and likely confirm a 50-basis-point hike in August. This could put pressure on UK government bond prices and lead to increased interest in options that protect against declines in the FTSE 100. In the past, a surprising rise in core prices in the May inflation report caused a sharp sell-off in gilts.
On the other hand, a lower inflation number could shock the market, causing a rapid retreat from the aggressive rate hike expectations built into SONIA futures. This scenario could lead to a rally in short-term government bonds as traders reassess the central bank’s future actions. In this case, we would prepare for falling yields.
Mr. Benjamin’s Speech
Mr. Benjamin’s speech will focus on financial stability rather than monetary policy. We will be attentive to his comments about the UK banking sector’s health or market operations, as these could affect borrowing costs for derivatives. Any new concerns about liquidity could indicate underlying stress in the system.
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by VT Markets
Jul 16, 2025
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