It is unlikely that there will be too many surprises but let's take a look at the balance of risks heading into each of the policy decisions coming up in Europe later today.
Swiss National Bank
The minimum should be a 50 bps rate hike but there's an off chance that they might go with a 75 bps rate hike instead. If the latter comes to fruition, expect that to underpin the franc considering that markets haven't quite priced that in going into the decision.
As for the policy in itself, the SNB has taken the bold step in tightening aggressively while switching up its narrative of the previously "overvalued" currency. It will be interesting to see how the language will evolve going into next year but I don't expect much, if any, change to the communique today.
Bank of England
A 50 bps is very much a given with the November decision to hike rates by 75 bps surely being a one-off for the central bank. The thing to watch today isn't so much so the rate decision in itself but instead, watch for any potential split in votes and how they will word the language on the economic outlook.
As inflation remains high and the cost-of-living crisis worsens, the window to tighten further is closing for the BOE and they might offer stronger hints of slowing down early next year.
As such, it is going to take a lot to really give the pound a material lift as risks are skewed towards a potential softening in stance by Bailey & co. later in the day.
European Central Bank
Similar to the SNB, the risks coming into today's decision will be an off chance that the ECB may hike by 75 bps instead. Policymakers seem split about the idea between that and a 50 bps move but on the balance of things, the latter seems likely now.
The recent easing in price pressures in November should afford policymakers some flexibility in making the decision but it may be tough to rule anything out at this stage with core inflation in the Eurozone staying elevated.
A 75 bps rate hike should give the euro a decent boost initially but be mindful of Lagarde's tone in the press conference as that could very well see some pullback in gains if she decides to strike a more cautious approach moving forward.
