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MNI PINCH UPDATE: GBP money markets are..........>

UK
UK: MNI PINCH UPDATE: GBP money markets are starting to buckle under the weight
of Brexit. We had previously argued that market expectations of a further hike
in 2019 partly reflected the lack of clarity from the BoE over its policy
response to different Brexit outcomes. Moreover, we suggested that the BoE could
hike if May's deal is passed by parliament (effectively restarting the
tightening cycle) or under a no-deal scenario (reflecting a surge in inflation
on the back of a sterling correction). The market is now turning more dovish,
with PINCH attributing a 31.4% probability of a 25bps December hike, down from
70.7% a month ago. Adding further fuel to this dovish shift, the Bank of
England's Gertjan Vlieghe indicated yesterday that in a no-deal Brexit scenario
it is more likely that monetary policy would be paused or eased, rather than
tightened.
Please see: https://emedia.marketnews.com/MNI_PINCH_Update_15-02-2019.pdf

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