LONDON: Sterling options volatility exploded to its highest in almost a year on Wednesday, reflecting the degree of trader nervousness ahead of a Bank of England rate decision where the chances of a cut are up in the air.

Implied overnight options volatility - a measure of demand for protection from big near-term price swings - hit 12.13%, the most since August last year and marking its biggest one-day rise since last June, according to LSEG data The pound itself was trading steadily, at $1.2836.

Sterling heads for best 2-week run since Nov

Market pricing around the outcome of the BoE meeting on Thursday has swung wildly in the past few days and by early Wednesday was showing around a 60% chance of a cut.