Pound Spikes against Dollar on U.S. Labour Market Surprise

"We expect the overall messaging from the meeting will have a distinctly hawkish tilt," says Elsa Lignos, Global Head of FX Strategy at RBC Capital Markets. 

The Pound-to-Dollar exchange rate entered the new week down sharply from April highs after being turned over by bad global market weather on Friday, but would be likely to sustain a recovery if given the all clear by the Bank of England on Thursday.

Seasonality is a major consideration for foreign exchange markets in April and May, with these two months tending to offer a strong historical guide to the performance of some of then world's major currencies.

The U.S. Dollar deflated in broad overnight losses, enabling the Pound-to-Dollar exchange rate to decisively reclaim 1.39 before looking toward the landmark 1.40 handle after the Federal Reserve stayed a steady and stable monetary policy course in April.

The U.S. Dollar is a standout performer and is advancing by close to half a percent against the Euro and a quarter of a percent against the Pound, at the start of what is typically a strong month for the U.S. currency.

The Pound-to-Dollar exchange rate is on the cusp of another firecracking rally that will be aided by investors' improving sentiment toward the global economy as well as trade-weighted depreciations of the greenback and Chinese Renminbi.