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Forex Signal (Wed May 18 2011, 4:30am NY Time EST) - UK MPC Meeting Minutes

Discussion in 'Current Forex Trading Signals' started by Henry Liu, May 17, 2011.

  1. Henry Liu

    Henry Liu Former FPA Special Consultant

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    MPC Meeting Minutes is scheduled to be released today and since it’s 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 Minutes Forecast 3-0-6 Previous 3-0-6
    ACTION: GBP/USD BUY (4 Vote For Hike) / SELL (2 Vote For QE)


    The Trade Plan
    We will be looking at the vote count today. If we get 4 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 Liu's Trading Method

    The Market
    Once again, MPC or Monetary Policy Committee, from Bank of England (BOE) will hold their meeting minutes on the actual vote count over the rate decision and the Asset Purchasing Facility program. If you recall, MPC once again left both interest rate and APF unchanged two weeks ago, and when there are no changes to monetary policy, BOE usually does not issue any statements until 2 weeks later during the MPC Minutes.

    The yearly CPI figure came out higher than expected at 4.5 %. Market speculation for further quantitative easing has pretty much diminished. It’s forecasted that Wednesday’s meeting will hold on the current rate decision but with inflation reaching an economically crippling level, The BOE is under pressure to act quickly and find some sort of innovative solution to counteract the high cost of living. The general theory is to raise interest rates in order to increase the cost of borrowing which lowers consumer spending and eventually decreasing the inflation level. Critics against an interest rate hike feel that the overwhelming external factors that are causing the biggest impact will still exist and create an even worse situation if interest rates are higher. At the very least, if we do get a strong concern out of this minutes over inflation, market will definitely be looking to BUY Sterling as a result.

    Additional Thoughts
    It is my opinion that GBP is well supported and UK CPI will remain under strong pressure… That means I will be looking for LONG trades on Sterling crosses only.

    Pre-news Consideration
    We could see pre-buying of GBP, therefore I’d be looking to go long on GBPUSD if market drops to around the 1.6300 level.


    Historical Chart and Data for UK MPC Meeting Munutes



    Thanks,


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    #1 Henry Liu, May 17, 2011
    Lasted edited by : Sep 8, 2016

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