BOE Out Of Touch With Its Economy?


(UK) Bank of England (BOE) releases Monetary Policy Committee Minutes show no change in the voting status from March. The interest rate vote was again unanimous and the Asset Purchase Target vote remained at 8 top 1. MPC member Miles again voted for £25B in more QE. The minutes showed the decision not to expand QE was “finely balanced” for several members. Majority saw no necessity for more QE at this point and no evidence that impact of QE would be different this time around.MPC to monitor outlook each month, more stimulus could be added if outlook warranted it.

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(UK) APR RETAIL SALES WITH AUTO FUEL M/M: -2.3% V -0.8%E; Y/Y: -1.1% V +1.8%E

How to interpret this?

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While BOE members are feeling that the current monetary policy is “finely balanced”, the economy has fallen back into recession, and to add insults to injury, the April Retail Sales came at -2.3%, the worst reading we’ve ever seen in the last 5 or more years (my calendar only goes back to 1997).  Although there are lots of expectations riding on the Olympic Games to bail out UK economy, fundamentals remain unchanged with the central bank unwilling to consider more aggressive measures.  My view:  SELL GBP on rally.

FUNDAMENTALS
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About Henry Liu

My name is Henry Liu and I am a Forex Trader and Mentor. I help traders achieve consistent income trading Forex while spending less time trading. My focus in trading is a combination of Fundamental Analysis, Technical Analysis, and Market Sentiment. Far too many retail Forex traders concentrate on just one aspect of trading, technical analysis, and ignore everything else; it is my goal (and vision) to educate every trader on how to take advantage of news trading and become more balanced traders.

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