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Submitted by Shant Movsesian and Rajan Dhall MSTA FXDailyterminal.com

Today's BoE meeting looks to be well covered, much in the same way as the FOMC last night, when the market reacted to the lack of clear direction for 4 hikes this year.

For the UK, a May hike from the BoE is still not as clear cut as in the US, but given the data has been broadly supportive of the near term fundamentals, we would expect this to give the MPC the confidence to stand by their conviction.  The previous meeting prepared the market for rates rising sooner and by more than previously priced in, and this looks very unlikely to be revised under the circumstances, and especially with the transition deal now agreed.

There is a very small risk that the BoE move on rates today, but this risk is less than 10% and would almost certainly catch the market off guard.  That said, Feb was in the running last year, so no surprise that there are outlying expectations for the unexpected, but this then moves us on to the vote split.  All members are expected to vote for a hold today, so any dissent will be taken as a sign that May is on.  From thereon it is back to data watching and of course, the Brexit talks.  Current pricing for a May hike, ranging from 65-90% depending on markets - OIS was 64.5% this morning.

EUR/GBP is pressing into the bids from 0.8700, but Cable is a little more hesitant as the USD regains its composure, but we are looking a potential move to 1.4225-50 if May is underscored.  The EUR cross rate could then test 0.8650, which is the next major level we are looking at on the downside.

GBPUSD 4HR Chart with levels