Barclays Bets on Narrowing BoE-ECB Rate Spread by December as BoE Rate Hikes Lag

According to Bloomberg, Barclays strategists on Thursday recommended positioning for a narrowing spread between the Bank of England policy rate and the European Central Bank deposit rate in December, as they expect the BoE to raise rates less than the ECB this year. In a report, fixed income strategists Moyeen Islam and Rohan Khanna said that if U.S.-Iran negotiations resume and energy prices decline, markets will likely reduce rate hike expectations for the BoE faster than for the ECB, given the BoE's more cautious tone on economic growth and labor market risks.
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