On Wednesday UBS suggested that.......>

EURO-STERLING: On Wednesday UBS suggested that "GBP's fall vs EUR is likely to

extend. We remain bearish on GBP & expect that it will slide further vs EUR to

0.92 by end-18 & 0.95 by end-19. The BOE is now priced to stay on-hold for

around 1 year. Admittedly, the UK's uninspiring macro performance has not

prevented the MPC from lifting the Bank Rate twice since Nov. Arguably, however,

the bar to this happening again is higher. On the one hand, the econ is likely

to continue to underperform. Global cyclical tailwinds are stalling, inflation

is falling faster than the MPC previously envisaged & domestic inflation remains

subdued. Brexit-related uncertainties are likely to continue weighing on

activity for a while longer in most scenarios. Brexit event risk is ample until

Mar '19. Increased odds of a "no-deal Brexit" & domestic political uncertainty

do not bode well with GBP continuing to price relatively little idiosyncratic

risk-premium. In addition, GBP's unfavourable valuation starting point suggests

that the bar for further weakness is not particularly high."