Any remaining Bank of England hawks may have transformed into doves overnight, leaving sterling bracing for a turbulent flight through uncertain economic skies. The last few months have been overwhelmingly positive for the pound, with the positive momentum driven by diverging monetary policies of central banks, with the BoE holding firm while others begin to ease. However, with consumer price inflation plummeting to 1.7%, exceeding market expectations, this will likely drive a weakening of the pound as the market starts to reassess the BoE's likely policy path.

The pound now faces considerable downside potential, with a 25-basis-point rate cut in November already priced in by markets and a further cut in December looking more likely. Additionally, with the Chancellor’s "painful" budget on the horizon, the spectre of 2022's disastrous mini-budget looms large, with any unexpected policy announcements potentially elevating short-term volatility in the currency market.