Market players are expecting another surge in pound as the Bank of England is likely to raise interest rates today due to the persistently high inflation in the UK. The bank has no other choice but to do it, especially with the current actions of the government.

Most likely, the Bank of England will raise rates by half a percentage point to 4%, which is the highest since 2008. They will also release forecasts for inflation and economic growth, possibly indicating the chances of a shallow recession.

Another data to be expected is the review on wage growth, which is actually the reason for the recent strikes and demonstrations in the UK. Its figure could determine whether inflation will remain high as another record hike will force companies to raise prices and consumers to expect further increases in their incomes.

Of course, there is a chance that the central bank will take a different path, increasing rates by only 25 basis points. That would lead to a decline in demand, pushing GBP/USD down rather sharply.

In terms of the forex market, the sideways trend in GBP/USD persists, so buyers need to return above 1.2420 to regain their advantage. Only the breakdown of this resistance level will strengthen the hope of a rise towards 1.2470, after which it will be possible for the pair to reach 1.2540. If pressure returns and sellers take control of 1.2350, the pair will fall to 1.2290 and 1.2230.

For EUR/USD, demand has surged, but buyers need to protect 1.1000 in order to maintain the chance of rising above 1.1050. Possible price levels in such a situation are 1.1090 and 1.1125. In the event of a decline, the pair could move below 1.1000 and head towards 1.0960 and 1.0920.