BOE to hold until Q1 2016

GBP FX and rates have been volatile over the past month, driven in part by the media's more hawkish reporting of recent BoE communication and disappointing economic data. 

"Overall, modest GBP outperformance is expected versus the EUR, but there might material depreciation against the USD", says Barclays. 

The BoE MPC vote for rate rises remains 9-0 against. While some members are moving closer to a voting for tighter policy, inflation remains nonexistent and will likely only reach 0.3% y/y by year-end. 

"As such, it will likely take until Q1 next year before the majority of the committee agree to hike the Bank Rate. Furthermore, tight fiscal policy and downside risks to business investment and confidence related to the EU referendum mean that the likely pace of policy tightening will be extremely moderate once it begins", added Barclays.