Sterling rallied to early Europe eight-day highs within a tenth-of-a-cent of 1.9823 (Apr 3, 10-week peak) as the continent absorbed the FT-reported news of a UK Treasury proposal to allow British-based multinationals to repatriate billions of pounds of foreign profits tax-free to the UK. The same news had buoyed GBP/USD to an Asian session top of 1.9780.
A UK Treasury source says any UK foreign tax change would be "revenue neutral" (Reuters). Cable has elicited support ahead of 1.9760 following its retreat from its early Europe highs. Stops above 1.9760 were tripped in Asia today. A "substantial" 1.9850 exotic option barrier is slated to roll off at today's 14:00GMT NY cut. Sterling last traded at 1.9850 on January 23, a day on which it scaled a 15-year peak of 1.9917.
A break of 1.9850 is seen increasing the risk of a test of 2.0000, a level at which there is further exotic exposure. Today's key US event risk is the 18:00GMT publication of minutes from the March 20/21 FOMC meeting. Six out of 10 Americans expect a recession within a year, according to a Bloomberg/LA Times poll.
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