Forex Signal (Thu. November 4 2010, 8:00am NY Time EDT) - UK BOE Interest Rate

Henry Liu

Former FPA Special Consultant
Messages
473
BOE (Bank of England) will be rendering its interest rate decision today, and it should provide strong volatility in the market if BOE's final decision is a surprise, here's the forecast:

8:00am (NY Time) UK Official Bank Rate Forecast 0.50% Previous 0.50%
APF (Asset Purchasing Facility) Forecast 200B Previous 200B
ACTION: GBP/USD BUY 0.75% (Rate) SELL 225B (APF)


The Trade Plan
In 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 in the APF or better known as quantitative easing, it would send a bearish signal to the market, and we should SELL GBP/USD immediately.

I'll be trading this release using my Spike Trading Method, for more information:
Henry's Trading Methods.

The Market
UK’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 both their official bank rates at 0.50% and APF (Asset Purchasing Facility) of 200 Billion Pound unchanged. The important focus as usual will be the accompanying BOE Statement if they decide to release one, and it is customary for BOE to only release a rate statement if there is a change in either the Interest Rate or the APF.

With recent quarterly GDP data showing UK's economy grew 0.8%, or doubling expectation of 0.4%, speculations for APF increase have been reduced significantly, although we may still get a 3 way vote when MPC releases its Meeting Minutes 2 weeks later, but it is extremely unlikely for BOE to surprise the market today.

Additional Thoughts
However, if BOE surprises the market, we should enter on a BUY immediately because we should see strong demand for GBP and this demand will be sustained for weeks... so it doesn't really matter if you get slipped 50 pips or your broker widened your spread, it should work out in the end...

If BOE decides to keep everything unchanged, we should stay out of the market as there is no reason to be in.

Pre-News Consideration
Since the forecast is unanimous for unchanged on both interest rate and APF, there is no pre-news sentiment on this release.

Historical chart and data for UK BOE Interest Rate


Thanks,


 
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Messages
9
ali

hi Hennery,
brother you are doing good job ,carry on brother,can you please tell me if we got BOE rates constant then what is the way to trade.please reply
thanks:)
 

seun oshofisan

Recruit
Messages
2
brokers wideing spreads

thanks henry,very good job indeed.pls why do brokers wideing spreads and cant anything be done?i lost a lot yerstday due to dat
keep up the good work bro
 

seuncaroline

Recruit
Messages
4
If BOE decides to keep everything unchanged, we should stay out of the market as there is no reason to be in.
hey henry,
i had earlier written you asking that i'd like to participate in a real-time news trading service if you are offering it for a fee but dont know how...can you help me? how much does it cost and how do we go about it...thanks.
 

seuncaroline

Recruit
Messages
4
thanks henry,very good job indeed.pls why do brokers wideing spreads and cant anything be done?i lost a lot yerstday due to dat
keep up the good work bro
seun,
can i ve ur yahoo id so we can share ideas n trade setup...u never can tell what great partnership we cud achieve while pulling pips together from 9ja...
 

Simon Edwards

Corporal
Messages
90
thanks henry,very good job indeed.pls why do brokers wideing spreads and cant anything be done?i lost a lot yerstday due to dat
keep up the good work bro
For the same reason hotels increase prices when big events are in town and drop them when they got too many empty rooms
 
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