Forex Trading: GBP/JPY
Posted by Byung Koo at 3:25 am
For the speculative trader!
Big movement expected after BOE meeting, expectations no change but look out for policy statement.
The British pound may have fallen against most of the majors, but the currency did manage to make slight gains against the ultra-weak Japanese yen.
UK data was in line with expectations, as the purchasing managers’ index (PMI) for the services sector rose to 56.8 in December from 56.6. This indicates expansion in the sector for the eighth straight month, and adds to evidence that the economy is slowing recovering from recession.
Today the Bank of England (BOE) is anticipated to announce at 13:00 CET that they’ve left rates unchanged at 0.50 percent, but this won’t even be the market-moving part of the announcement. Instead, traders will be looking toward the BOE’s policy statement. This has consistently been the prime “news event” of recent rate decisions. Last month, the BOE indicated that they would likely wait until their February meeting before considering any changes to the Asset Purchase Facility (APF), which is currently aiming to purchase £200 billion worth of high quality assets. With no program changes expected this time around, there is potential for the British pound to gain on neutral news as traders will price in an end to the BOE’s quantitative easing program.
Trade idea:
Take a short position at 149.50 with a stoploss on 150.50 or take a long position at 145.75 with a stoploss on 144.60. Mulder Currency Fund puts this two orders in book before announcement of BOE and we will wait for the possible big movement.
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