Trading The BOE Interest Rate Release, December 14, 2017

UK BOE Interest Rate Decision will be the main focus of Sterling traders, even though the central bank is not expected to hike rates yet again this year, the statement and vote count could say plenty about the direction of BOE’s current monetary policy, and perhaps provide a glimpse into the next rate change; therefore, although this is not as tradable, we should still pay close attention to it.

7:00 am (NY Time) UK BOE Interest Rate Forecast 0.50% Previous 0.50% 7:00 am (NY Time) APT (Asset Purchasing Target) Forecast 435B Previous 435B DEVIATION: (0.25% BUY 0.75% / SELL 0.25%) 7:00 am (NY Time) UK Votes Rate (0-0-9), APT (0-0-9)

The Trade PlanIn the extremely unlikely event BOE hike rate to 0.75%, we´ll buy GBP 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 unchanged decision on the Official Bank Rate, then we should see selling pressure in the GBP and similarly, the market will be selling GBP for weeks if BOE fails to convince it today.

I’d recommend using the Recommended Pairs from above as they are based on my CSM, which should provide the best combination of currency pairs to trade based on better/worse news… of course, you can also trade the default pair: GBP/USD.

Outlook ScoreOutlook score is derived from market sentiment, focus, and economic indicators for the currency. It represents the long-term trend of the currency and its market perception. In short, a strong Outlook Score means more long-term demand for the currency, and a weak Outlook Score is the opposite.

Definition(From Wikipedia) BOE Interest Rate, or the official bank rate (also called the Bank of England base rate or BOEBR) is the interest rate that the Bank of England charges Banks for secured overnight lending. It is the British Government’s key interest rate for enacting monetary policy. It is more analogous to the US discount rate than to the Federal funds rate. The security for the lending can be any of a list of eligible securities (commonly Gilts) and are transacted as overnight repurchase agreements. When an announcement of the change in interest rates is made this is the rate the Bank of England is changing. Changes are recommended by the Monetary Policy Committee and enacted by the Governor.

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