Credit Agricole CIB Research previews the July BoE decision on Thursday.

"This week, next to the newsflow regarding fresh policy initiatives of the Burnham government, FX investors would focus on the outcome of the July BoE policy meeting. We and the UK rate market expect the MPC to keep the bank rate on hold. That said, the UK rates investors are pricing in c.65bp of BoE tightening at the time of writing – which is a very hawkish outlook in our view," CACIB notes.

"We further think that the MPC could remain non-committal with respect to future hikes, notwithstanding the latest increase in global energy prices and given the still challenging outlook for the UK economy. This could deal a blow to the current market rate expectations and thus to the GBP’s relative rate appeal. We maintain a bearish outlook on the GBP from current levels vs the EUR and USD," CACIB adds.