Sterling may come under renewed pressure if the Bank of England moves ahead with an interest-rate cut in December, according to MUFG Bank.

The bank noted that markets are only partially pricing in such a move, with around 16 (approximately) basis points of easing reflected in current pricing — short of a full 25-basis-point cut, according to LSEG data. That leaves room for both front-end gilt yields and the pound to fall should the BOE decide to act next month, the analyst said in a podcast.

MUFG said the likelihood of a December cut will hinge on incoming inflation data. The U.K.’s consumer price index held steady at 3.8% in September, defying expectations for an increase, which could bolster the case for policy easing if price pressures continue to moderate in the coming weeks.

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MUFG’s comments highlight potential downside for the pound and front-end gilts if the BOE cuts rates sooner than markets anticipate. Traders will focus on upcoming U.K. inflation and wage data for confirmation that disinflation trends justify easing in December.