Forex Analysis (Wed September 22 2010, 4:30am NY Time EDT) - UK MPC Meeting Minutes

Henry Liu

Former FPA Special Consultant
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) where 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 currency 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.

We’ll have to pay more attention today and look for the vote count on both the rate decision and APF program. If there are more than one dissenters in either vote, we could see market react to it immediately and we’ll analyze the vote and possibly jump into a trade.

BOE Andrew Sentance is expected to be the lone dissenter again wanting a 0.25% rate hike. With the recent high sustained inflationary pressure in UK, exceeding the 3.0% annual target, we may see more speculation leaning towards a possible rate hike.

It is important to not that the threat of financial collapse due to global economic slowdown is real and while high inflationary pressure may be less desired, a dip down back to recession must be avoided... We may see MPC leaning towards unchanged verdict to buy more time for the economy at the expense of a higher inflation, making this release a most likely no trade.

Additional Thoughts
We’ll wait for the release and then see how the market reacts afterwards. The focus will be on the actual vote count and if we do have dissenting votes, then market could move in a steady manner for the next few hours, giving us plenty of opportunity to cash in on the movement, therefore spike trading is really not necessary.

Pre-news Consideration
Market may still be trading based on the aftermath of FOMC meeting, therefore we may see strong GBP against USD as a result.




hi Henry, what do you mean by BUY (2 Vote For Hike) / SELL (2 Vote For QE)? i don't get it. waiting for your response. thanks


hi Henry, what do you mean by BUY (2 Vote For Hike) / SELL (2 Vote For QE)? i don't get it. waiting for your response. thanks
He means if the BOE Minutes show that 2 or more members voted for a rate HIKE then BUY gbp/usd or if 2 or more members voted for increase in QE (Quantitative Easing) then SELL gbp/usd.