Market had almost priced in an interest rate cut of at least 0.25% some even speculating 0.50%. However, the sensible cut would be 0.25% and the BOE did not disappoint.
Market was really waiting for whether or not the BOE will announce a larger asset purchase amount to pump more liquidity into the economy post Brexit to help boost the economy.
I decided to place a one leg straddle with the following details: –
GBPUSD: Stop if Offered at 1.3300, Spot at 1.3325 and SL at 1.3330
As it turned out the interest rate cut didn’t really move the market, but what cause the floor from under the GBP to collapse was the announcement of an increase of 60Bn to the asset purchase program totaling 435Bn (previously, 375Bn).
My trade was triggered at within 5 minutes the GBPUSD was at 1.3172, I squared the position at 1.3185 for a trading profit of 115bps. Thank you BOE, thank you Carney.
The Panthenon Investment Group 