The British pound is the day?s biggest market mover, but you would never be able to tell that from just looking at the price action of the GBP/USD. Instead, the pound?s strength is the most significant against the Euro, Swiss Franc and Japanese Yen. With the UK markets closed, there is little news behind the move.
Instead, much of the rally has been credited to speculation that the Bank of England could surprise on Thursday with a 50bp hike. The last time they ever raised interest rates by anything more than 25bp was back in February 1995, over 12 years ago. They have lowered rates by more than 25bp in two instances over the past 10 years; once in 2001 and once in 1998. The majority of traders in the market are only expecting a 25bp hike, but when it comes to the Bank of England, you never know what could happen as they have a track record of catching the market completely off guard.