– Bank of England (BoE) to Reiterate Updated Growth & Inflation Forecast
– Is There a Growing Dissent in the Monetary Policy Committee (MPC)?
Trading the News: Bank of England Minutes
The Bank of England Minutes may generate a more meaningful advance in the GBP/USD should we see a growing number of central bank officials show a greater willingness to normalize monetary policy sooner rather than later.
What’s Expected:
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Why Is This Event Important:
The policy statement may show a growing dissent within the BoE as the fundamental developments coming out of the U.K. raise the prospects for a stronger recovery, and the fresh batch of central bank rhetoric may pave the way for fresh highs in the GBP/USD should the committee adopt a more hawkish tone for monetary policy.
Expectations: Bullish Argument/Scenario
Release
Expected
Actual
Consumer Price Index Core (YoY) (APR)
1.8%
2.0%
Manufacturing Production (MoM) (MAR)
0.3%
0.5%
Retail Sales inc. Auto (MoM) (MAR)
-0.4%
0.1%
Sticky price pressures paired with the ongoing pickup in private sector activity may put increased pressure on the BoE to raise the benchmark interest rate ahead of schedule, and the GBP/USD may continue to carve higher highs & higher lows in the second-half of the year as the central bank moves away from its easing cycle.
Risk: Bearish Argument/Scenario
Release
Expected
Actual
Jobless Claims Change (APR)
-30.0K
-25.1K
Mortgage Approvals (MAR)
72.0K
67.1K
Gross Domestic Product (QoQ) (1Q A)
0.9%
0.8%
However, the persistent slack in the real economy may keep the BoE on the sidelines as Governor Mark Carney retains a cautious outlook for the region, and the GBP/USD may face a larger correction in the days ahead should the policy statement drag on interest rate expectations.
Read More:
Price & Time: About to Throw in the Towel?
GBP/JPY Top Valid Below 171.25, Eyes 169.05; GBP/USD Struggles on CPI
How To Trade This Event Risk(Video)
Join DailyFX on Demand to Cover Current British Pound Setups
Bullish GBP Trade: BoE Shows Greater Willingness to Normalize Policy
Need green, five-minute candle following a hawkish statement to favor a long British Pound trade
If reaction favors buying British Pound, long GBP/USD with two separate position
Set stop at the near-by swing low/reasonable distance from entry; need at least 1:1 risk-to-reward
Move stop to entry on remaining position once initial target is hit, set reasonable limit
Bearish GBP Trade: MPC Retains Neutral Bias for Policy Outlook
Need red, five-minute candle to consider a short GBP/USD trade
Implement same setup as the bullish British Pound trade, just in the opposite direction
Potential Price Targets For The Release
Chart – Created Using FXCM Marketscope 2.0
Outlook Remains Bullish as Pair Carves Higher Low in May
Interim Resistance: 1.7000 Pivot to 1.7030 (100.0% expansion)
Interim Support: Interim Support: 1.6730 (61.8% expansion) to 1.6720 (50.0% retracement)
Impact that the BoE Minutes has had on GBP during the last release
Period
Data Released
Estimate
Actual
Pips Change
(1 Hour post event )
Pips Change
(End of Day post event)
APR 2014
04/23/2014 8:30 GMT
—
—
-11
-38
April 2014 Bank of England Minutes
The BoE voted unanimously to retain its current policy in April as the central bank sees a stronger recovery in 2014, but the British Pound failed to benefit from the meeting minutes as the MPC talked down the threat for inflation. In turn, the GBP/USD slipped back below the 1.6800 handle, with the pair trailing lower throughout the North American trade to end the day at 1.6779.
— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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Source: Daily fx
