"Hike expectations on the markets might get corrected slightly to the downside, which would put pressure on Sterling" - Commerzbank.

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The Bank of England is likely to raise Bank Rate by 25 basis points today in response to rising inflation, but analysts at Commerzbank expect a 'dovish' tone that will ultimately weigh on Pound Sterling.

Commerzbank analyst You-Na Park-Heger says UK economic data published over recent weeks do not provide any reason to deliver a hike greater than 25 basis points.

A 50 basis point rate hike would be the kind of surprise that could generate a rally in the value of the Pound, but like most other analysts Commerzbank see such an aggressive move as unlikely.

"Is it possible that the BoE might speed things up and hike its key rate by 50bp?" asks Park-Heger, "if one believes their recent comments, a 50bp rate hike today seems not terribly likely."

She says the Bank of England is concerned about the effects high inflation rates might have on consumer behaviour.

Indeed, at its last meeting the vote in favour of a rate hike was not unanimous as one member voted in favour of keeping rates on hold.

As we note in our preview here, if more members vote for no rate hike the Pound could come under notable pressure as it would be a firm signal the Bank will pass on a rate hike in June.

"It seems more likely that it might seem more cautious and might dampen the rate hike expectations for the next meetings," says Park-Heger.

The market is expecting a further 25bp for each of the rate meetings over the course of the year.

But Commerzbank's economists expect the Bank will start taking breaks between meetings, avoiding a run of consecutive rate hikes.

"If this emerges after today's meeting rate hike expectations on the markets might get corrected slightly to the downside, which would put pressure on Sterling," says Park-Heger.

Pound exchange rates are however already under pressure ahead of the Bank's policy update, suggesting markets are already preparing for a 'dovish' outcome.

GBP/EUR was down half a percent at one stage on Thursday morning at 1.1815, GBP/USD gave back nearly three-quarters of a percent to trade at 1.2532. (Set your FX rate alert here).

For further meaningful losses a 'dovish' surprise must be delivered by the Bank, but this could prove difficult given how far expectations have softened.

Therefore the odds of a Pound-positive knee-jerk surprise has potentially become more likely.