MNI PINCH UPDATE: Having fully-priced a 25bps....>

UK: MNI PINCH UPDATE: Having fully-priced a 25bps rate hike by end-2019 a month

ago, there is now less than a full-hike pencilled in. The market will find it

increasingly difficult to price the rate trajectory in light of the extreme

differential in Brexit outcomes. A relatively smooth Brexit with limited fallout

would spur speculation of a steeper rate trajectory than currently expected.

However, a disorderly Brexit with a sharp sterling correction and slump in

demand could see the BoE having the balance the need of supporting economic

activity and containing a surge in inflation. With such a wide range of outcomes

and limited visibility on how the UK's withdrawal from the EU will play out,

policy rate expectations will be caught in no man's land until directionality on

Brexit becomes clearer.

- For the full PINCH results please see

http://marketnews-m.objects.xtenit.com/MNI_PINCH_UPDATE.pdf