Busy day for the pound with the Bank of England minutes, UK unemployment figures and FED Reserve meeting
The pound is set for another busy day with a host of data starting at 09:30 this morning with the Bank of England minutes and UK unemployment figures due for release. Unemployment figures (both the unemployment rate and the claimant count) are expected to stay on hold at 8.2% and 4.9% respectively. Should this be the case I would expect to see a small gain for the pound, however any deviation from these expected figures and we could see market volatility as a result. More importantly for anyone with an interest in the Pound will be the Bank of England minutes at 09:30 as this will give an insight into any future monetary policy and more importantly, whether more monetary stimulus has been discussed. Following Mervyn Kings speech last week at his annual Mansion House dinner, he made his first indications that more stimulus is on the cards and should today’s minutes confirm this then we can expect Sterling losses as a result this morning. This trend may continue throughout the day against the Euro and most majors, however moves against the US dollar could turn around this afternoon.
Short term direction for cable hinges on FED Meeting, will there be more stimulus?
As with their UK counterparts, the heads of the US Central Bank (the Federal Reserve) will meet later (17:30 BST) with many analysts expecting another round of stimulus from Ben Bernanke (FED Chairman). Recent moves for cable (GBP/USD) have been pretty varied, being up at 1.63 just 7 weeks ago, falling to a low of 1.53 last week, and now forging its way back towards the 1.60 level. We are currently sitting at the 1.57 territory, and I feel any stimulus from the FED is likely to drive the dollar level to 1.58/1.59. Make sure you are in a position to take advantage as the moves could be short lived.
With plenty of data due today and the Greek coalition party still yet to be forged (there is talk this may be in place by the end of today) then we can expect plenty of movement in todays trading. Should you wish to discuss my thoughts and to run through the service we offer at currencies.co.uk then please email Mike at mgv@currencies.co.uk and I will happily give you my thoughts and opinions on this current market.
