March is Typically a Good Month For GBP

The pound’s good fortune is set to continue this month, if seasonality is any guide.Sterling appreciated versus the dollar every April during the last 13 years in what Bank of America Merrill Lynch describes as the strongest seasonal trend among Group-of-10 currencies. In a research note, the bank recommended a two-month option trade to take advantage of the periodic strengthening pattern, while Mizuho Bank Ltd. and Rabobank also have put stock in the U.K. currency’s tendency to outperform in April.Strong SeasonalityThe pound has gained versus the dollar every April for more than a decadeThe trend corresponds to a typical increase in incoming capital at this time of the year, driven by dividend payments to British shareholders from foreign companies and other investment inflows that mark the start of the U.K. financial year. The fact that sterling has strengthened in April even during past episodes of heightened financial instability and political risks helps boost conviction in the seasonality, according to Bank of America.

Source: Why April Showers the Pound With Good Fortune – Bloomberg

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Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam