GBP/USD Fundamental Analysis for April 1, 2013

The GBP/USD is trading a little better this morning. A general weakness in the U.S. Dollar is helping to make the British Pound look good. Technically, the market is rebounding after a short setback early last week.  If upside momentum can pick-up then look for investors to try to drive this market through the recent top at 1.5259. The next potential upside target is 1.5337.

Fundamentally, the market appears to be reacting to improvements in the economy, but the main driver is the belief that the Bank of England will refrain once again from additional quantitative easing. Last month’s minutes was the catalyst behind the move that drove the Sterling from 1.4900 to 1.5259. In the minutes, the central bank members discussed quantitative easing and its potential negative influence on price stability.

With the BoE set to meet next week, traders already appear to be pricing in the possibility that it will refrain once again from implementing its aggressive asset buyback program.