###POV: BIG WEEK AHEAD FOR SHORT-STERLING:......>

BOE: ###POV: BIG WEEK AHEAD FOR SHORT-STERLING: The upcoming week will be key

for short sterling, as the BoE publish the bank stress tests on Wednesday and

present the economic impact of different Brexit scenarios on Thursday.

- The market will scrutinise these scenarios to analyse how likely rate

hikes/cuts are going forward, particularly in the case of a hard Brexit.

- Following comments from BoE MPC member Saunders last night where he said that

in the case of an orderly Brexit the market is under-pricing the prospect of

future interest rate hikes (see mainwire 20:55GMT), reaction in both

short-sterling and GBPUSD/EURGBP has been surprisingly muted.

- Saunders is considered to be at the hawkish end of the MPC spectrum so some of

the lack of movement could be due to markets dismissing his comments as not

being in line with the rest of the committee.

- However, we think it is more likely that markets did not react because market

participants are concerned that we will not see the deal passed and hence not

see an orderly Brexit.