Economists at ING expect the Bank of England (BoE) to surprise with just a 50 bps hike. Therefore, the GBP/USD pair could plummet to the 1.1250 area.

Scope for a 50 bps BoE surprise 

“The BoE will only hike 50 bps. The consensus 75bp hike would end up seeing UK CPI undershooting the BoE's 2% target in 2025. In other words, the BoE does not need to increase the pace of tightening right now.” 

“The FX options market attaches a 150 pip GBP/USD range to today's event risk. That could see GBP/USD trading back to the 1.1250 area if we are right with our BoE call. EUR/GBP could trade back to 0.87 too.”

“Sterling also looks challenged from both: i) the international investment environment where US equities sold off 2.5% yesterday on the prospect of higher for longer Fed rates and ii) what is shaping up to be quite a tight fiscal event in the UK on 17 November as the new government struggles to plug its borrowing gap.”

See – BoE Preview: Forecasts from 10 major banks, big rate hike in doubt