Societe Generale said UK data were limited last week, and the March RICS housing survey showed weaker conditions across most measures. It linked softer demand to higher energy costs, fewer mortgage deals, and rising mortgage rates.
The Bank of England Credit Conditions Survey ran from 23 February to 13 March and included the period of the energy shock. It reported that banks expect demand for, and availability of, secured household and corporate credit to rise in Q2 2026.
Bank Of England Speakers And Blackout
This week includes speeches from Bank of England members Bailey, Greene, Taylor, and Mann. These are expected to be the last public remarks before the blackout period ahead of the 30 April MPC meeting, where rates are expected to stay unchanged.
Bailey previously pushed back on market pricing of rate rises, even as about 40bp of hikes remain priced in. Taylor may address whether a rate cut could be considered as early as April, following a tentative ceasefire agreement.
For data releases, Societe Generale expects February GDP to rise by 0.1% month on month. It will also track the BRC March retail sales index for an update on consumer spending under higher fuel costs and weaker confidence.
The UK housing market is showing familiar signs of weakness that we observed around this time in 2025. The latest RICS UK Residential Market Survey from March 2026 shows new buyer enquiries have been flat for two months, suggesting demand remains fragile as mortgage rates stay elevated. This points to potential downside in housing-related assets and sterling volatility.
Market Implications For Rates And Sterling
We remember the Bank’s Credit Conditions Survey from Q1 2025 seemed overly optimistic about credit demand in the face of an energy shock. This time, with the UK having just exited a technical recession at the end of 2025, and February 2026 GDP showing a slight 0.1% rebound, any optimism must be cautious. Traders should consider positions that benefit from low-growth scenarios, such as paying fixed rates on interest rate swaps.
This week brings a flurry of speeches from BoE members before their quiet period ahead of the next meeting. Unlike last year when Governor Bailey was pushing back against rate hike bets, the market is now pricing in over 50 basis points of rate cuts by year-end. These speeches could cause SONIA futures to reprice if the tone is more hawkish than expected.
We will be watching for any dovish signals, especially after two MPC members, Swati Dhingra and Dave Ramsden, voted for a rate cut at the last meeting in March 2026. This hints at a growing split within the committee on when to start easing policy. Any sign of a third member shifting to a dovish stance could accelerate bets on a summer rate cut.
The key data point will be the March 2026 CPI inflation report, as the February figure of 3.4% was still well above the 2% target. Additionally, the BRC’s March retail sales data will be critical for gauging consumer strength, especially since recent ONS figures showed retail volumes were flat. A miss in either of these figures could solidify expectations for an earlier rate cut, impacting short-term bond yields.
