###POV: MNI PINCH calculates the markets......>

SONIA: ###POV: MNI PINCH calculates the markets pricing in just over a 43%

chance of a rate hike in August this year, down from near 53% seen last week, as

markets react to mild risk-off sentiment and following todays sharp move in

reaction to softy Eurozone flash PMI data. While the chance of a 25bps rate hike

in November has slipped to 77% from 89%.

- This posses risk for release of UK April inflation data. MNI median forecast

is for headline CPI and core CPI to remain unchanged at 2.5% and 2.3%

respectively.

- With money markets already rallying this morning (Short Sterling 1 to 6 ticks

higher), it is likely that any downside surprise will not lead to much of a

rally. However any upside surprise could see a sharp correction to money markets

and the rise the chance of a rate hike in August/November.