We expect the BoE to increase the Bank Rate by 25 bps. The decision to slow down to a 25 bps hike is based on recent economic data not significantly outperforming expectations. This is unlike the situation before the June meeting when data had been notably positive. However, since the BoE did not update its forecasts in June, it's challenging to gauge their precise expectations and reactions to the current data.

Currently, the markets have priced in a substantial likelihood of a 50 bps hike for the upcoming meeting. Coupled with a higher projected terminal rate than our base case, this could introduce downward pressure on the GBP around the meeting time. The extended GBP position held by hedge funds can further accentuate this potential downside risk.