A 25 bps rate hike is fully priced in at this stage and traders will be scouring for clues on what will come next for the BOE in the months ahead. Surging inflation pressures haven't made their job any easier and an economy ravaged by the cost-of-living crisis is only adding to the difficulty of the task at hand.

Yet, markets are still somewhat convinced that they will deliver further on rate hikes. Looking at the pricing here, we can see the terminal rate priced in for the BOE is sitting close to 5.00% (currently 4.91%). That at least indicates two more rate hikes, including the one today, to follow and more or less another somewhat priced in at the moment.

So, what's the play here?

Essentially, this may look to be peak hawkishness already for the BOE i.e. markets looking for rates to hit 5.00%. There is just that little bit more scope in pricing that further but this all just means that the central bank has a greater capacity to disappoint in the months ahead.

And if policymakers fail to convince today, it will just add to the technical burden for sterling this week. GBP/USD has already retreated back after testing one-year highs around 1.2660-66 and a shift in BOE pricing to be more dovish could really send the quid reeling.

I would think Bailey & co. will try to at least play it as coy as possible and keep open the door for more aggressive moves. However, eventually reality will catch up with them and they might have to acknowledge the fact that the window to tighten further is starting to close shut.

I mean, they wouldn't want to risk more reputational damage via a policy misstep and send the economy into a hard landing as credit and financial conditions tighten too much in the coming year. That's a serious risk to consider amid the already softer outlook in general.

Still, the decision today could work on both sides. There are certain quarters of the market expecting the BOE to finally take a more dovish stance. But just like what we saw in March, they may end up being disappointed.