Bank of America Global Research discusses its expectations for tomorrow's BoE policy meeting.
"It's a close call, but we expect the BoE to leave interest rates unchanged on Thursday, due to Omicron effects/uncertainty...We look for the BoE to hike 15bp in February and 25bp in May. Beyond that we see the BoE hiking slower than the market does," BofA notes.
"We expect Omicron to form a strong narrative as to why the MPC will keep rates on hold and, with market still pricing in a one-in-three chance of a hike, our base case view is bearish GBP on no change in rates. Of course, we have to acknowledge this new injection of uncertainty, and prevailing negative sentiment suggests the pain trade is a squeeze higher in GBP if the MPC hikes," BofA adds.