Barclays sees the Bank of England on hiking beyond June with additional 25 basis point hike in August for a 5% terminal rate.
The Bank of England hiked rates to 4.5% on May 11. The CPI data this week came in higher than expectations at 8.7% versus 8.2%. Moreover, the core inflation level came in at 6.8% versus 6.2% expected and 6.2% last month. A freaky used car price rise was an excuse but it nevertheless remains well above the targets.
Those numbers sent expectations for rates to the upside. The UK tenure yield moved up 33 basis points this week from 4.009% to 4.335% this week. The 2-year yield is up 52 basis points from 3.964% to 4.485%.
HSBC is more hawkish as they now see a 5.25% terminal rate.