"GBP may not get much lift from this meeting" - TD Securities.

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Pound Sterling has rallied into this week's Bank of England (BoE) decision, leaving one currency strategist to warn it is at risk of a "buy the rumour, sell the fact" reaction to Thursday's decision and guidance.

"GBP may not get much lift from this meeting," says James Rossiter, Head of Global Macro Strategy at TD Securities in London.

The Monetary Policy Committee (MPC) is expected to raise rates but there remains a degree of uncertainty as to whether the hike will be in the regular 25bp increment or an unusually large 50bp move.

Money market pricing shows investors are fully priced for a 50bp hike, therefore an initial sell-off would result from a 25bp hike.

Furthermore, declines could be felt if the vote of the Monetary Policy Committee (MPC) was a close one for a 50bp hike, suggesting this will be a one-off move.

TD Securities says its base case outcome sees a 50bp move, with a fairly narrow majority.

"The tone is cautious, and the immediate focus is on rising inflation expectations and worries about a wage-price spiral," says Rossiter.

Crucially, he expects longer-term projections for economic growth and inflation to show reasons to be concerned, with growing slack and below-target inflation by 2025.

"The MPC implies that this could be a one-off 50bps hike, with 25bps the norm going forward," says Rossiter.

He forecasts the Pound to Dollar exchange rate to retreat back to 1.21 on such an outcome.

The Pound's appreciation over recent weeks are consistent with the market's assumption a 50bp hike will be delivered alongside a further commitment to act "forcefully" if incoming data requires.

The Pound to Euro exchange rate (GBP/EUR) is up half a percent this week at 1.1950, an addition to last week's 1.34% gain.

The Pound to Dollar exchange rate (GBP/USD) is up by 0.20% at 1.22, an addition to the previous week's 1.44% gain.

But should the MPC hike definitively by 50bps (9-0 vote) and signal that further 50bp hikes are possible the Pound could rise to $1.2350 says Rossiter.

A 150 pip rise in GBP/USD would potentially take GBP/EUR to 1.22 from current levels, on the condition EUR/USD remains flat. (Set your FX rate alert here).

Under this hawkish stance (of which a 10% probability is assigned) TD Securities expects the MPC to signal it is much more worried about inflation persistence and a tight labour market, and are focused on breaking any potential wage-price spiral.

Looking to the downside, a dovish outcome (35% chance) would involve the MPC hiking by 25bp and signalling more hikes to come.

"Nothing changes much from the previous meetings, and the higher near-term inflation forecast is downplayed in part because of its impact on real incomes further out," says Rossiter.

Here, the GBP/USD exchange rate would decline to 1.20, a roughly 200 pip move that would imply GBP/EUR goes back to 1.1750, provided EUR/USD is unchanged.