British Pound Short Trade Held into BOE Rate Decision

Thursday, May 9, 20130 comments



The British Pound seems unlikely to find meaningful support in a status-quo outcome to the BOE monetary policy announcement and we continue to hold GBPUSD short.
Talking Points
  • British Pound Short Trade Held into BOE Monetary Policy Announcement
  • Australian, NZ Dollars Outperform on Supportive Employment Data in Asia
The monetary policy announcement from the Bank of England headlines the economic calendar in European trading hours. Mervyn King and company are forecast to the size of the asset-purchase program unchanged at 375 billion. UK economic news-flow has cautiously improved relative to economists’ expectations since April’s sit-down of the rate-setting MPC committee. Furthermore the Bank extended its Funding for Lending (FLS) scheme late last month, limiting the scope for further action in the near term. A status-quo result seems firmly entrenched in investors’ baseline outlook however, meaning such an outcome unlikely to yield a dramatic response from the British Pound. With that in mind, we remain short GBPUSD.
The Australian and New Zealand Dollars outperformed in overnight trade. The Aussie added as much as 0.6 percent against its top counterparts after April’s Employment data topped expectations, weighing against calls for another RBA interest rate cut at the June monetary policy meeting. The report showed the economy added 50,100 jobs to trump calls for a meager 11,000 increase. The unemployment rate declined to 5.5 percent while the labor-force participation rate rose to 65.3 percent, marking an 11-month high. The Kiwi likewise benefitted from signs of labor-market resilience. Statistics New Zealandreported a 1.7 percent increase in employment in the first quarter, marking the largest gain in over 8 years.
Asia Session:
GMT
CCY
EVENT
ACT
EXP
PREV
22:45
NZD
Unemployment Rate (1Q)
6.2%
6.8%
6.8%
22:45
NZD
Employment Change (QoQ) (1Q)
1.7%
0.8%
-0.9%
22:45
NZD
Employment Change (YoY) (1Q)
0.3%
-0.7%
-1.4%
22:45
NZD
Participation Rate (QoQ) (1Q)
67.8%
67.8%
67.2%
23:50
JPY
Official Reserve Assets (APR)
$1258.0B
-
$1254.4B
0:00
NZD
QV House Prices (YoY) (APR)
7.1%
-
6.5%
1:30
CNY
Consumer Price Index (YoY) (APR)
2.4%
2.3%
2.1%
1:30
CNY
Producer Price Index (YoY) (APR)
-2.6%
-2.3%
-1.9%
1:30
AUD
Employment Change (APR)
50.1K
11.0K
-31.1K
1:30
AUD
Participation Rate (APR)
65.3%
65.1%
65.2%
1:30
AUD
Unemployment Rate (APR)
5.5%
5.6%
5.6%
1:30
AUD
Full Time Employment Change (APR)
34.5K
-
-4.1K
1:30
AUD
Part Time Employment Change (APR)
15.6K
-
-27.0K
2:00
JPY
Tokyo Avg Office Vacancies (APR)
8.54%
-
8.56%
5:00
JPY
Leading Index (MAR P)
97.6
97.7
97.7
5:00
JPY
Coincident Index (MAR P)
93.3
93.2
92.5
Euro Session:
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
8:00
EUR
ECB Publishes Monthly Report
-
-
Low
8:30
GBP
Industrial Production (MoM) (MAR)
0.2%
1.0%
Medium
8:30
GBP
Industrial Production (YoY) (MAR)
-1.6%
-2.2%
Medium
8:30
GBP
Manufacturing Production (YoY) (MAR)
-2.0%
-1.4%
Medium
8:30
GBP
Manufacturing Production (MoM) (MAR)
0.3%
0.8%
Medium
11:00
GBP
Bank of England Interest Rate Decision (OBR)
0.50%
0.50%
High
11:00
GBP
BOE Asset Purchase Target (£)
375B
375B
High
Critical Levels:
CCY
SUPPORT
RESISTANCE
EURUSD
1.3085
1.3207
GBPUSD
1.5473
1.5594
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