- GBPUSD bursts higher after optimistic BoE minutes.
- EURGBP pressures recent lows, double top still valid.
- See the April forex seasonality report.
The British Pound has been mired in a month-long slumber, but the period of weakness may be close to ending. Weighed down by the uncertain outcome of the May 7 General Election, the Sterling has all but ignored good economic data out of the UK, choosing instead to focus only on the negatives, or mainly soft inflation data.
However, as the Bank of England's April meeting minutes detailed today, policymakers remain cautiously optimistic about the state of the economy, leaving the door open for potential action later this year if the country can sort out its electoral woes.
This is where the opportunity lies for the British Pound. Traders have turned so negative on the Sterling due to the election, that Sterling 90-day options have effectively priced out a BoE rate hike until June 2016. If interest rate expectations are pulled forward, there is a significant enough gap of time that needs to be repriced that could serve as a substantial tailwind for the British Pound.
--- Written by Christopher Vecchio, Currency Strategist
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