Profit Mongers @ 5:23 AM, Thursday November 10 2011
0700 UK Interest Rate Decision - (unanimous to hold at 0.5%)
Affliated Reports:
UK Asset Purchase Facility (unanimous to hold at 275B)
All 52 analysts polled by Bloomberg expect the BOE to again hold rates steady at 0.5%.
Also all 38 analysts expect the BOE to hold the Asset Purchase Facility at 275 billion.
Last month the BOE surprised the market with a 75 Billion hike in APF, no analyst had
expected this move although there had been more talk of adjusting APF in the days and
weeks ahead of the release. The Pound fell sharply on the news as APF is essentially
QE and means basically that the Bank will print more money. More money means more
supply and thus the value of the existing money goes down because more is in circulation.
Cable fell from around 1.5450 to 1.5270, about 180 pips. This however formed a new low
and the pair started a long rally off this thru the rest of October to a high of 1.6165
on the last day of the month. It is unlikely the BOE will do anything this month as
they will probably want to stay in 'wait and see' mode to assess the impact of the this
75 Billion hike. Although various MPC members have expressed a willingness to add to
this amount if the UK economy comes under further strain in the months ahead. Regardless
any change that might occur will cause a significant move.
if they raise APF by 25B or more, GBPUSD should drop 50 or more pips
if they lower AFP by 25B or more, GBPUSD should go up 50 or more pips
If they hike, GBPUSD will go up over 100 pips
If the cut, GBPUSD will go down over 100 pips
Visit Profit Mongers website and check out our live trading room!