MUFG Research discusses GBP outlook in light of the BoE policy trajectory.
"Overall it seems less likely the BoE will begin raising rates in December and will at least delay until February. The UK rate market has since scaled back December rate hike expectations further although it is still judged as a close call," MUFG notes.
"In the FX market, the contrast between the still hawkish Fed comments and more cautious comments from the BoE have resulted in cable falling further towards the 1.3200-level. If the Fed speeds up QE tapering and the BoE does not raise rates this month, the timing of the gap between the first Fed and BoE and rate hikes could be a lot shorter than expected and keeps risks tilted to the downside for cable in the near-term," MUFG adds.