Profit Mongers @ 5:55 AM, Wednesday December 07 2011
0700 UK Interest Rate Decision - (unanimous to hold at 0.5%) 52
Affliated Reports:
UK Asset Purchase Facility (unanimous to hold at 275B) 39
All 52 analysts polled by Bloomberg expect the BOE to again hold rates steady at 0.5%.
Also all 39 analysts expect the BOE to hold the Asset Purchase Facility at 275 billion.
This was the same as November and despite coming out flat the Pound did rally 35 pips
on the release, this was just down to noise as we would not get involved without some
sort of deviation. October was very exciting as the BOE raised the APF by 75 billion
and although this was expected to occur eventually it was not expected to occur so
soon and the GPBUSD sold off hard about 200 pips, but then turned around and rallied
from the 1.5270 low thru-out the rest of October, up to 1.6165 by October 31st. The
reversal was quite aggressive and occurred without pullback, no series of higher lows
and highs just an sharp rally. Today it is very highly unlikely the BOE will adjust
rates but they could hike APF some more at some time as the economic picture is very
grim and yesterday's Industrial Production figures confirm this. Manufacturing PMI
was below 50 last week, but Services PMI is still higher and makes-up the bulk of the
UK economy. The government has been trying to shift the UK economic emphasis on
service back into more manufacturing to try and balance things and make the economy
more resilient. The UK economy has alot of financial services which have been hit
bad in this recession.
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
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