Mikael Olai Milhøj, senior analyst at Danske Bank, points out that the GBP was essentially unchanged on the day after the BoE meeting and they are keeping firm their expectation of range-trading at 0.85-0.87 (roughly +/-1 percent band from the middle).

“The key to moving outside the band is likely (1) getting closer to realising some form of Brexit and/or (2) a significant change to the domestic economy. But both options remain elusive. In case of a resolution of the politics, the core BoE expectation and forecasts remain centred on a soft Brexit with a rebound in inflation and domestic demand. In turn, we think, this should help cap the immediate upside even if politics get resolved, as the central bank would not need to change much. In any case, the BoE would likely wait and see how the economy evolves ex-post a positive Brexit event.”