Sterling is trading modestly higher on the USD ahead of the BoE policy decision. Signals of a rate pause could draft the GBP down, economists at Scotiabank report.

25 bps hike expected

“The BoE is widely expected to hike 25 bps, with a 1/4 point move more or less fully priced in. Guidance will be key for the GBP’s short-term reaction.” 

“We think the BoE tightening cycle is likely completed after today’s move to 4.25% so it risks sounding dovish; markets are pricing in a bit more tightening, however. Closing the door on more hikes could drive the GBP lower.”

See – BoE Preview: Forecasts from eight major banks, final 25 bps hike