The story here is energy, not the rate decision itself. British natural gas and Brent crude have jumped nearly 20% this month on the back of the Iran war, the same driver that pushed the Fed to hike a day earlier and has already moved the ECB. That leaves sterling and UK rates markets more exposed to the path of oil and gas prices than to Thursday's widely expected hold, since a further leg up in energy costs would strengthen the case for the November hike markets are already pricing at 80%. Gilts carry a second, related risk: any signal the BoE will scale back or halt gilt sales would ease supply pressure on the long end of the curve, a dynamic Franklin Templeton is already betting on with its "particularly attractive" call on the asset class.---Info via Reuters.---The BoE looks set to hold rates Thursday, but an Iran-driven energy shock has markets far more convinced of a November hike than economists are.Summary:BoE decision due at noon UK time Thursday (11:00 GMT, 7:00am ET); Bank Rate expected to hold at 3.75%A Reuters poll found only three of nine MPC members seen voting for a hike this weekMarkets price an 80% chance of a November hike, versus about one in eight economists polled by ReutersUK natural gas and Brent crude have jumped almost 20% this month on the Iran war, the same driver behind Wednesday's Fed hikeUK inflation was 3.1% in August, already above the BoE's 2% target; J.P. Morgan's Allan Monks sees it peaking at 3.9% in FebruaryThe BoE will also update its gilt sales plans Thursday, with reports it may halt sales of 20 and 30 year gilts or exit secondary market sales altogetherThe Bank of England looks set to hold Bank Rate at 3.75% when it announces its decision at noon UK time on Thursday, 11:00 GMT, 7:00am US Eastern time, but investors are watching closely for any sign that a Middle East driven jump in energy costs could push the Monetary Policy Committee toward a hike sooner than expected.A Reuters poll last week found most economists expect the BoE to leave rates unchanged for the rest of the year, with only three of the nine MPC members seen voting for a hike this week. Financial markets take a different view. As of Wednesday, they were pricing an 80% chance of a quarter point hike in November, the first of roughly four increases investors expect over the coming year. Economists remain far less convinced, with only around one in eight of those polled by Reuters expecting a November move.The gap between market pricing and economist expectations is being driven by energy prices. British natural gas and Brent crude futures have jumped by almost 20% this month, a surge tied to the war involving Iran that has already pushed the European Central Bank and the Federal Reserve to raise rates, with the Fed hiking on Wednesday and signalling further increases to come. Higher energy costs raise the risk of UK inflation, already running at 3.1% in August, climbing further above the BoE's 2% target, which the central bank has missed in all but three months of the past five years.J.P. Morgan economist Allan Monks said the BoE is likely to stay on hold this week to avoid feeding market expectations for a rapid tightening cycle, but continues to expect a hike in November, arguing there is a clear case for the Bank not to delay any longer given that energy price moves point to inflation peaking at 3.9% in February. Others are less convinced. Analysts at Evercore ISI said the gap between market pricing and policymaker expectations is nowhere more stark than in the UK, with rates markets discounting roughly four and a half hikes over the next year while Bank leadership still hopes to avoid raising rates at all. Governor Andrew Bailey told reporters at the BoE's last meeting not to interpret its stance as edging toward a hike, and asset manager Franklin Templeton said this week that gilts look particularly attractive on the view that a cooling labour market and softer economic outlook point to looser policy than markets are pricing.Beyond the rate decision, gilt investors are watching for the BoE's annual update on its balance sheet reduction plans. The Telegraph reported this week that the central bank will stop selling 20 and 30 year gilts, which have been hit hard by a global bond sell off, a move that could give finance minister John Healey more fiscal room ahead of his first budget statement on October 28. The BoE could go further still and halt secondary market gilt sales altogether, shifting that supply to the government's Debt Management Office instead, according to the same report. RBC strategist Peter Schaffrik said that would leave the DMO as the sole supplier of gilts to the market, giving it full control over the issuance strategy.---Note, no press confernce today: This article was written by Eamonn Sheridan at investinglive.com.