Perhaps no sector is more manipulated by government action than foreign exchange and that has been particularly true in the last few years. But the return to normalcy may also bring back an honest carry trader.
Bank of England policy makers held three votes for the first time at their meeting this month as they debated introducing guidance on interest rates under new Governor Mark Carney, according to a central bank official.
Mark Carney placed jobless numbers center stage tying monetary policy to a 7% unemployment figure. With an economic recovery under way in the U.K., GBP's bias over the short- to medium-term is likely to be upwards.
The BOJ releases their policy announcement tomorrow, and the market is expecting no new stimulus from the BOJ, which is perhaps why the Yen is rallying. The Pound is also rallying on more specific policy guidance from Carney and the BOE.
The market assumption is that economic recovery leads to higher bond yields, which make gold expensive to hold. This would be true if investment funds were significantly long in gold, but they are not.