The consensus is for the BOE to hike rates by 25 bps today, given considerations to recent economic headwinds. However, after the more aggressive Fed yesterday and SNB surprise earlier today, I reckon it is inviting some bets for a bigger rate increase by the BOE later.

Cable fell to a low of 1.2058 earlier in the session but has picked itself up to 1.2165 currently and running into a test of the 100-hour moving average (red line) at 1.2163. There is also still near-term resistance closer to 1.2200 to limit gains for the time being.

As much as a surprise 50 bps rate hike by the BOE may see a knee-jerk reaction higher in the pound, I would say the play is to fade that as ultimately such a move would just invite sooner recession risks for the UK. More on that here.

This article was written by Justin Low at www.forexlive.com.