Bank of America Merrill Lynch FX Strategy Research discusses GBP/USD outlook ahead of the BoE November policy meeting on Thursday.
"Given strongly worded guidance from rate setters, we expect the BoE to vote 6-3 in favor of a hike on Thursday. There is still some chance of no hike, but the big question now is what comes next.
We see risks of a more hawkish message as market pricing of one hike a year seems inconsistent with the BoE's urgency. For our part, we think this will be 'one-and-done' from the BoE even if they do not describe it that way," BofAML argues.
GBP: one and done?
In the nearterm, GBP remains a rate trade, but with Nov now a done deal and further expectations for tightening into 2018, we think GBP will struggle and remains vulnerable to a squeeze in positioning. Our bias remains to hold long GBP volatility positions," BofAML adds.
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ps, earlier on the BoE today:
