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Prior to the release of the FOMC minutes, the GBP/USD pair is down about 0.28%. The pair has so far fallen from a high of 1.2469 to a low of 1.2357. The positions of net GBP speculators rocketed higher and have now been positive for five weeks in a row, making the odds of a move into the length intriguing for the near term.
FOMC minutes may act as a spark for a rise in the US dollar that would reflect a hawkish Fed stance. Additionally, a series of Fed speakers in the upcoming days may further sway public opinion in the direction of the US Dollar bulls.
The macroeconomic environment is fast changing, which is making things more difficult for Fed officials: While the picture is become hazier due to persistent banking sector turmoil, inflation remains uncomfortably high. Analysts anticipate the minutes to elaborate on the Fed’s policy stances in light of these uncertainties and the fact that officials are divided over what to do next. It’s likely that a June hike will remain an option.
On the other side, there are a number of factors that could support the pair, including the mess around the debt ceiling and the recent flurry of better UK economic data that led to an improvement in the BoE’s predictions for UK GDP and inflation at its May policy meeting.
