Oil prices and the GBP appreciation to be key drags on UK inflation

While McCafferty's and Weale's support for a rate hike is all well and good, it is the majority which will carry the day. And there are still some factors which might pull down the pound sterling today. Two key drags on inflation, oil prices and the appreciation of the pound, have become even more powerful since the preceding meeting. 

"Oil prices have declined further, and the pound sterling has appreciated another 2% versus the USD and the EUR. This might have made the BoE revise its inflation forecasts downwards", says Commerzbank. 

Depending on the size of the adjustment, market participants might postpone their rate-hike expectations considerably as the longer inflation remains below the BoE target, the bigger the risk of persistently low inflation, and that will make the MPC majority keep the Bank Rate at its current level for longer.