MUFG Research discusses its expectations for this week's BoE policy meeting on Thursday.
"We highlighted that we expected the pound to be more volatile this week. The pound is also facing key event risk from important Brexit and BoE meeting," MUFG notes.
"We expect the BoE to favour a further expansion of asset purchases with the current purchase plan of GBP200 billion set to run out. A GBP100 billion asset purchase expansion was discussed at their last meeting in May. It remains the most likely outcome with risks skewed in favour of a larger expansion.
The GBP reaction is likely to depend more though on any update on the BoE’s latest thinking on negative rates. The GBP could stage a relief rally if the updated BoE communication does not reinforce negative rate speculation, and vice versa," MUFG adds.