Economists at Bank of America Global Research expect the Bank of England (BoE) to hike 25bp at its meeting this week, then 25bp in May and August. Nonetheless, they see limited scope for the British pound upside.

BoE to confirm it will cease gilt reinvestments

"We expect the BoE to hike 25bp at its meeting this week, then 25bp in May and August. We expect the BoE to confirm it will cease gilt reinvestments when it hikes in February, starting 'passive' Quantitative Tightening (QT). We expect the BoE to also begin active sales in November at an initial pace of GBP5 B a month."

"We doubt that a hawkish BoE provides the kind of impetus that it did in December as GBP enters into a month which has historically presented seasonal headwinds to sterling."