A neat crib sheet via ING
It is important to take note that market pricing is siding more towards a 15 bps rate hike but economists are still split on the matter with the balance erring slightly towards being unchanged (important to be wary of this dynamic).
Hence, why the "polls" and "expected" are reflecting the BOE to keep the bank rate steady at 0.10% but that's not exactly fitting with what rate expectations are showing.
Therein lies the risks for the pound and ING weighs in with their thoughts on that here:
GBP has undoubtedly benefited from the dramatic re-pricing of the UK money market curve since early September. However, the BoE's broad, trade-weighted measure of GBP is up only 1.1% over the same period, so it seems fair to describe GBP gains as 'hard-won'.With a 15bp hike now fully-priced for the 4 November BoE meeting, we suspect that any concern over voting patterns (8-1 or 7-2?) plus some mild rate protest from the BoE through its 2-3 year CPI forecast could prompt a modest correction in GBP. BoE day event risk priced in the FX options market puts the cost of a EUR/GBP straddle at around 50 GBP pips. Based off the current spot near 0.8450, we think some modest disappointment - and a re-pricing lower of the 1.25% Bank Rate for late 2022 - could carry EUR/GBP to the 0.8500 area.The sharp turn lower in gas prices would also seem to leave GBP a little vulnerable as the surge in late September and into October helped drive BoE tightening expectations higher and this factor is now reversing. Longer term, however, a BoE hike well ahead of the European Central Bank should see EUR/GBP rallies as short-lived. Into early 2022, we expect EUR/GBP to be trading below the 0.84 area.
