BoE may strike a cautiously optimistic tone this week - ING

In view of James Smith, Developed Markets Economist at ING, last week's Brexit breakthrough should herald a relatively swift agreement on a post-Brexit transition period - something Bank of England Governor Carney has been pretty vocal about over recent months.

Key Quotes

“If a transition deal is agreed early next year, this should help unlock some short-term investment as the risk of a cliff-edge in 2019 fades.”

“This means the Bank of England may strike a cautiously optimistic tone this week - although we suspect the MPC will keep its cards close to its chest when it comes to the timing of another hike. Having said that, policymakers have signalled they'd be comfortable with one hike in 2018. So a February, or more likely, May rate rise can't be ruled out.” 

“But there are still some big Brexit questions to be resolved next year, not least when a final  trade deal will be agreed. And with the economy still struggling to regain momentum, we still caution that a hike next year is far from a done deal.”