We continue to suspect that markets are underpricing the probability of a BoE policy adjustment. We suspect that as with the Fed, the threshold of removal of emergency measures is significantly lower than standard interest Rate hikes. While interest rates in the UK never went negative, it's difficult for MPC members to justify ultra-easy policy given the economic momentum. BoE Governor Carney’s Mansion House speech dented our expectations of a 2017 rate hike.

However, BoE chief economist Haldanes indicated that marginal data would suggest hikes in 2H (most likely November). This is not the first time Haldane's view diverged from the MPC, but it will put the markets on alert for shifts in doves Broadbent and Vlieghe and improving data. Markets are now pricing in 12bp of hikes by end of 2017. To materialise our constructive GBP view, we see long GBPCHF as the ideal position.