Derek Halpenny at Mitsubishi UFJ said in a note that if the Bank of England’s
rate decision strengthens market expectations of a September rate hike, the
pound could appreciate. He warned the BOE may express greater concern about
spillovers from the Middle East conflict; prolonged energy-price rises now look
a larger risk than at June’s meeting and could "certainly force the Bank of
England to act, even with mixed labor market conditions." Markets currently
price roughly a 50% probability of a September hike.
