MUFG Research discusses its expectations for the BoE policy trajectory.

"Following the Bank of England monetary policy meeting on 2 nd February, the OIS market was close to pricing the BoE as done with its tightening cycle. Since then the OIS by the end of this year has jumped by 80bps. What has prompted an 80bps jump in policy rate expectations by the end of the year? That’s not an easy question to answer! We would certainly argue this is excessive," MUFG notes. 

"As of now it is hard to see what the BoE would cite as justification for one further hike let alone three hikes as priced in the market. The March data for the UK is crucial now. Further weakness like in February would be justification for the BoE to pause which would see a big adjustment in rates and would initially at least see GBP dragged lower too. That’s where the risks lie over the short-term," MUFG adds.