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Week Ahead (1/2)

UK
  • The Bank of England left rates on hold and UK markets saw some of the biggest weekly moves since the onset of the global financial crisis as markets reassessed the outlook for Bank Rate. We analysed the decision as well as summarising over 20 sell-side views in the MNI Bank of England Review (link here). Despite the moves, markets continue to price in rates of around 1% by the end of 2022, which still seems on the high side to the MNI Markets team. We think that a December hike is still in play but there will be a lot more focus on the economic data, the evolution of Covid-19 cases and individual MPC members' speakers (but probably less focus on any comments from Governor Bailey).
  • Looking to this week, EU-UK trade relations seem to be coming under increasing stress with issues surrounding the Northern Ireland protocol and the dispute with France over fishing not helping the mood. Any headlines are likely to become increasingly important, particularly surrounding Northern Ireland, with some concerns that there could be an escalation in tensions after the COP26 summit concludes later this week.

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