Pound banks gains on upcoming data releases, SLF offsets returns of futures

As stated earlier the UK's economic and political shape is better than we have thought earlier. As a central case, we are maintaining the moderately positive stance particularly against Euro.

BoE MPC's approach to the currency: Comments on the negative impact of GBP strength were notably absent in this week's inflation report. Coming Tuesday MoM inflation report for April is scheduled to be released. The Consumer Price Index in the United Kingdom increased 0.20 percent in March of 2015 over the previous month.

1^st Union Budget after UK election: There is no date scheduled so far but senior party members have revealed there will be a budget relatively soon.  A fiscal tightening is not an inevitable option and current central projections for the budget balance are well within the Conservatives' manifesto on borrowing and they could ease fiscal policy and meet their own borrowing rules. Since this is conservatives' first budget in this parliament free of coalition constraints, this has created curious expectations.

The day kicks off with UK construction output figures. The preliminary Q1 GDP release last month estimated the sector to have contracted by 1.6%, implying a 5.3% rebound in March after declines of 2.5% and 0.9% respectively in January and February.

Trading tips:

It has been nonstop bull rallies for sterling, now it seems that it has halted and stored some of its profit potential aside to give breathing space for others who have lost the opportunities. Even though it looks reversal signal on some pairs like GBPUSD we are not ready to believe this. It is just quietly waiting for minor corrections. Just one good news that can take off again.

Synthetic Long Futures (SLF): (EURGBP)

The synthetic long futures strategy is used when the futures trader is bullish on the underlying futures but seeks an alternative to purchasing the futures outright.

It is constructed by buying ATM call option and selling an equal number of ATM put option of the same underlying futures and expiration month.

The Synthetic Long Futures are an options strategy used to replicate the returns of a long futures position.