On Wednesday, the Pound Sterling had a sell-off and Gilt yields were falling, ING's FX analyst Chris Turner notes.

BoE might have to lower interest rates earlier than expected

"That did not seem to fit with a 'Sell UK' theme ahead of the November budget. We see GBP move much more from the Bank of England perspective. Here, investors expect UK Chancellor Rachel Reeves to hold the line on her fiscal rules and perhaps deliver greater fiscal tightening in a move to rebuild budget headroom."

"This means that the BoE will have to take the strain by lowering interest rates earlier. We have seen a decent move in GBP swap rates this month as investors reprice the BoE terminal rate down to 3.25% next summer."

"However, that repricing of the BoE cycle might have come far enough for the time being – meaning that it is a little dangerous to chase sterling through big support in GBP/USD at 1.3140/50 or above the 0.8850/70 area in EUR/GBP. A BoE that retains some of its hawkish rhetoric could actually see sterling reverse some of its losses at next week's MPC meeting."