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A snapshot of analyst takes ahead of the Bank of England's interest rate decision on Thursday, that will in all likelihood see a 25 basis point hike announced that will take Bank Rate to 0.75%.

"Should the bank prove to moderate what is priced into the strip we would expect front end US-UK spreads to move further in favour of the USD. Such a move would support the prospect of GBP/USD heading back towards 1.2830, this marks the mid-point of the trading range over the last two years (1.1412-1.4248)," says Stretch.

The market is currently pricing in 134 basis points of hikes to come out of the Bank by December, with a potential 25 points of hikes being delivered by May 2023.

Asmara Jamaleh at Intesa Sanpaolo says the Bank's policy meeting will be crucial for the Pound, not so much for the decision on rates, rather for the indications on the subsequent path for rates in light of the Russia-Ukraine war.

In light of the conflict in Ukraine Jamaleh sees the Bank emphasising a deterioration in the trade-off between growth and inflation, "to the detriment of the pound".

Market expectations for further tightening at the Bank of England dropped sharply as the situation in Ukraine escalated and then reversed back to previous levels last week, although not higher.

Ahead of the decision the GBP to EUR exchange rate is quoted at 1.19 and the GBP to USD exchange rate is at 1.3090.

Above: Performance of GBP/EUR (blue) and GBP/USD (orange) since the start of the year.

Reference rates at article's last update:

GBP/EUR: 1.1920 \ GBP/USD: 1.3180High street bank rates (indicative): 1.1687 \ 1.2910Payment specialist rates (indicative): 1.1860 \ 1.3113Find out more about specialist rates and service, hereSet up an exchange rate alert, here"The focus of the BoE meeting will be the actual policy decision, the vote-count and how the Bank views the trade-off between growth and inflation concerns in light of the Ukraine war," says analyst Marek Raczko at Barclays.

Raczko says prioritising growth over inflation concerns related to the Ukraine war could see Pound Sterling come under pressure with rates markets paring expectations for future monetary policy tightening.

While UK inflation is surging and unemployment is low, the outlook for the economy has deteriorated given inflation is expected to eat into household expendible incomes.

But Dominic Bunning, Head of European FX Research, at HSBC Bank plc says the Bank of England’s meeting on Thursday "may offer some brief tactical upside for GBP".

"A 25bp hike is fully priced in, and so a rate hike in itself is unlikely to have a notable impact on the currency. However, with the data pulse having remained strong in the UK in recent weeks and inflation pressures intensifying due to the surge in commodity prices since late February, there is room for a relatively hawkish outcome in terms of the MPC’s vote split," says Bunning.

In February the Bank's Monetary Policy Committee voted by a majority of 5-4 to increase Bank Rate by 0.25 points to 0.5%, but those four dissenting voters actually wanted a more substantive 50 basis point hike.

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However, given the uncertainty posed by the war in Ukraine bets for a 50 basis point move in March have fallen back.

But, "should we see further calls for 50bp hikes this week by some MPC members, then we would expect GBP to bounce," says Bunning.

Bunning also makes a strong point when he observes sentiment towards the UK currency is notably downbeat heading into the decision.

This makes for a remarkable shift in fortunes for what was at one point in February the best performing major currency of 2022.

Typically, when sentiment turns too heavily in one direction a countertrend move can occur following a monetary policy decision.

"GBP is close to its lowest levels since November 2020, suggesting sentiment around the currency is currently quite downbeat. If we do indeed see some renewed votes for a larger hike this month, then it would likely benefit GBP in the short-term," says Bunning.