LONDON, July 31 Reuters The pound held steady versus the dollar on Wednesday but headed for its biggest oneday drop against the yen in nearly three months after the Bank of Japan BOJ raised interest rates in an unexpectedly hawkish move.

Investors were mainly focused on the Bank of England39;s interest rate decision on Thursday, with greater uncertainty than usual as policymakers have not spoken publicly for more than two months due to rules in the runup to July 439;s election.

The pound was trading steadily, at 1.2832 and was on course for a 1.5 monthly gain against the dollar.

Sterling options volatility, meanwhile, exploded to its highest in almost a year, reflecting the degree of trader nervousness ahead of the decision.

Bank of America strategists called the decision super close, but said they believed the central bank would cut rates by 25 basis points.

The question is has the data since June changed the minds of the dovish members, who were close to cutting in June, enough. The lack of BoEspeak makes it difficult to gauge, but we suspect, for the dovish members, it doesn39;t, they said.

Implied overnight options volatility a measure of demand for protection from big nearterm price swings hit 12.13, the most since August last year and marking its biggest oneday rise since last June, according to LSEG data .

Market pricing around the outcome of the BoE meeting has swung wildly in the past few days, and by Wednesday morning was showing around a 63 chance of…