Another week another dollar (or is it pound?)

I expect this week to be extremely volatile for the GBP USD currency pair.

Overnight index swaps price in only 100 basis points of additional BoE interest rate cuts over the next 12 months to 2.00%, while BoE Governor King has indicated explicitly he would consider lowering rates to nearly zero to provide stimulus to the UK economy.

Hence the release scheduled for 4:30 AM EST on Wednesday of the BoE minutes from the last meeting's massive 150 bps cut will be crucial for GBP USD trading this week, as there is a clear divergence from the BoE Governor's stance and what the market believes the overall Montary Policy Committee's commitment to continued dovish behavior stands at. Should the cut vote be unanimous and the text of the minutes extremely dovish, we should expect to see continued GBP USD weakness possibly to the 1.30's by year end.

I will be short GBP against the USD on any GBP strength prior to Wednesday's release in anticipation of a very dovish set of minutes.