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Forex Analysis (Wed November 17 2010, 4:30am NY Time EDT) - UK MPC Meeting Minutes

Discussion in 'Current Forex Trading Signals' started by Henry Liu, Nov 17, 2010.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

    Jul 5, 2010
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    MPC Meeting Minutes is scheduled to be released today and since it is customary for BOE (Bank of England) not to release a statement along with its interest rate decision (2 weeks ago) if there were no changes in either rate decision or APF (Asset Purchasing Facility, UK’s quantitative easing program), today will be the first time for a glimpse into what took place during this meeting, here is the forecast:

    4:30am NY Time UK MPC Meeting Minutes Forecast 1-0-8 Previous 1-0-8
    ACTION: GBP/USD BUY (2 Vote For Hike) / SELL (2 Vote For QE)

    The Trade Plan
    We will be looking at the vote count today. If we get 2 votes for hiking 25 basis points, we should see some strengthening in the Sterling and a BUY GBP/USD trade should be justified. If we get 2 votes for quantitative easing, or to increase the current APF from 200 Billion Pound, GBP should weaken and a SELL GBP/USD trade should be justified.

    Due to the nature of this release, you need to have a newswire or audio service in order to trade it. We should see a steady market reaction after the release and possible carry over to the NY Session.

    I'll be looking for an after news retracement trade. For more information, please read:
    Henry's News Trading Methods.

    The Market
    Once again, MPC or Monetary Policy Committee, from Bank of England (BOE) will be releasing their meeting minutes on the Rate Decision meeting along with the actual vote count over the rate decision and the Asset Purchasing Facility program. If you recall, MPC once again left both intereste rate and APF unchanged.

    With the yearly CPI figure consistently above the 3.0% level, market speculation for further quantitative easing has diminished, however BOE Governor King stated in a speech yesterday that BOE could expand stimulus as inflation could be slowing... and there is risk for inflation to undershoot BOE's target in 2 years.

    Of course the reaction was rather negative for Sterling, but overall market is not yet ready to push GBP lower without any strong news catalyst, and this MPC Minute could provide some momentum, if Adam Posen (BOE Official) was able to convince at least one other member of the MPC to agree on quantitative easing. On the other hand, if more MPC officials join Andrew Sentance, then GBP could push back to the recent highs.

    Additional Thoughts
    With better 3rd Quarter GDP release plus the surprise increase of yearly CPI, Sterling is not likely to weaken, despite of what Gov. King is saying, especially when he is not openly committing to stimulus. I'll be neutral and this release could push GBP either way.

    Pre-news Consideration
    No Pre-news trading today.


  2. Ahmed H

    Ahmed H Private

    Jun 19, 2010
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    Could anyone please tell me what is hike and QE in 1-0-8?
  3. George Zerial

    George Zerial Private

    May 26, 2009
    Likes Received:
    here ya go ...

    The breakdown of the MPC members' interest rate votes tends to be the most important part of the minutes. The vote is reported in an 'X-X-X' format - the first number is how many voted to increase rates, the second number is how many voted for a rate reduction, and the third is how many voted to hold rates;

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