The British pound is the story of the day as hawkish minutes from the latest monetary policy meeting spurs across the board gains in the currency pair.
Given the recent weakness in UK economic data, the market had anticipated tepid comments from the central bank. The general belief was that the Bank of England did not want to do anything that would take the country?s exchange rate beyond 2.0. However instead of contemplating a 25bp hike versus no hike, the central bank actually debated 25 versus 50. Even though the members voted unanimously in favor of a quarter point hike, the fact that they were considering more versus less was enough to bring some bulls back into the market. More specifically, the BoE said that there is a “high probability of another rise later in the year.” The last part of this statement suggests that June may be too early to expect another move, especially given the recent pieces of economic data. Therefore even though we could see further pound strength, the rally could be limited.