BoE likely on hold

The BoE is likely to keep the Bank Rate and asset purchase decision unchanged at its October meeting. However, The tone of the MPC from the release of the policy minutes could sound on the hawkish side to some, as the MPC will want to lean against recent market expectations that have been pushing back the date of the first hike into 2017. 

"In particular, the MPC will insist that global woes will likely not derail the BoE's strategy at this stage given current domestic strength. As a result, downside risks are seen for EUR/GBP in the week ahead. Services confidence is expected to rebound slightly from the unexpected decline in August to 56.1, although nonetheless pursuing gradual moderation", says Barclays.

Moreover, August total production is likely to rebound 0.4% m/m (1.5% y/y), driven by a pickup in manufacturing (0.5% m/m, 0.0% y/y) as motor vehicle production rebounded a whopping 15% in August. The risks are on the downside, however, but if our forecast is realized, the carry over for Q3 would be -0.3% q/q. 

"All in all, UK economic growth, while slowing, remains relatively robust, but fiscal consolidation will likely weigh on activity in an environment of surprisingly low inflation and the underpriced impending EU referendum. As a result material GBP/USD depreciation is still expected and only modest GBP outperformance vis-à-vis the EUR", added Barclays.