GBP Mid-day Analysis

We are not sure why the Pound is showing strength this morning in the wake of dialogue from the BOE that could be seen as discouraging. While the BOE head suggested he was watching very closely for deflation signals, he also suggested that wages might be showing the start of a turn upward. However, we think the primary reason behind the Pound rally is the removal of one major global headwind (Ukraine fighting) and if the other headwind (Greece) is removed, that could inspire even more long term buying and short covering in the Pound. In fact, a rise above 1.5340 could signal a major technical and fundamental reversal in the Pound.