UK BOE INTEREST RATE

NEWS TRADING
Thursday April 5, 2012
[7:00am NY Time]

BOE (Bank of England) will be rendering its interest rate
decision today, and it would provide strong volatility in
the market if BOE´s final decision turns out to be a
surprise, here´s the forecast:

7:00am (NY Time) UK Official Bank Rate
Forecast 0.50% Previous 0.50%
APT (Asset Purchasing Target)
Forecast 325B Previous 325B
ACTION: GBP/USD BUY 0.75% (Rate) / SELL 375B (APT)





The Trade PlanIn the extremely unlikely event BOE hikes rate to 0.75%, we´ll buy GBP/USD immediately on a spike trade. Because of the level of this surprise, I think we´ll see a strong trend change for GBP in the next few weeks, so we should BUY and keep a small portion for larger gains… On the other hand, if we get a surprise increase above the forecasted 325B in the APT or better known as quantitative easing, it would send an even more bearish signal to the market, and we should SELL GBP/USD immediately.


The MarketUK´s BOE, Bank of England´s Monetary Policy Committee (MPC) is once again scheduled to release their interest rate decision today and the expectations are to keep their official bank rates at 0.50% and to keep the APT (Asset Purchasing Target) at the current level of 325B Pound, according to a majority of economists surveyed by Reuters and Bloomberg. The important focus will be the MPC Minutes, as usual, which are scheduled 2 weeks later; therefore if we don’t get surprises today, market will ignore this release.


Additional ThoughtsBOE does not release an accompanied statement unless there is a change in either Rate or APT, we should not force a trade on an unchanged decision.

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