BoE Preview: Delayed Brexit, delayed hikes - TD Securities

"The ongoing delay in signing off on a Brexit Withdrawal Agreement has left uncertainty elevated longer than we previously expected," note TD Securities analysts.

Key quotes

"We anticipate that Article 50 will ultimately be extended by up to a few months. Therefore, we expect the next BoE rate hike to come in August (was May), with only one hike this year as the BoE has to wait longer for improving economic data. We expect further hikes every six months thereafter."

"Next week's BoE decision should be relatively muted, however: the MPC will shy away from any broad judgments on Brexit developments. While the global backdrop is likely to dampen growth projections slightly, the labour market remains tight. Inflation revisions are likely to reflect primarily the moves in energy prices. The annual supply-side stock-take should leave long-term trends relatively unchanged."

"FX: With uncertainty over Brexit climbing to yet another crescendo, we do not think this month's MPC meeting is likely to provide sterling with a strong directional push. Too many questions linger on the political front for investors to have any visibility beyond. Looking beyond Brexit developments, we expect cable to trade in line with the broader USD ahead of the meeting. Unless fresh political catalysts emerge, we would not be surprised if GBPUSD consolidated around current levels ahead of the MPC."