For some unexplained reason there wasn’t much noise revolving around the BOE decision, however, I felt that with the uncertain UK economy and Carney’s earlier comments about raising interest rates early next year that possibly we may see some reaction from the marketplace.
At about 6:55pm, when spot was hovering around 1.5350, I placed my straddle; Stop if Bid at 1.5370 and Stop if Offered at 1.5330. with correspondingly stop losses at 1.5350. Yes, the straddle is tighter at 20 bps higher and lower to spot rate. Then again, because there was little nosie in the media, I didn’t think volatility would be great on this event.
As it turned out, BOE held interest rates and votes were the same to hold rates and also for QE. Minutes indicate a ‘no hurry’ stance to raising interest rates and BOE will probably only consider doing so in the second half of 2016.
The GBP went south, triggering my Offered trade at 1.5330. I was still in my car when I did this trade, so within half an hour of the data release, when GBPUSD hit 1.5280 I decided to square the trade and go for dinner with my wife. Locked in trading profits of 50bps.
BOE, Carney to speak tonight at 2am Friday, morning Singapore time. Will there be any surprises from him?
It will also be the same time that FOMC minutes from the last rate decision will be released. Will the minutes illuminate why Janet Yellen decided not to raise interest rates?
The Panthenon Investment Group 