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BoE Rate Cut?

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I see IG have changed their rate cut forecast from no change a couple of days ago to a cut to 0.25% now and is now in line with FXPro, FXCM and ForexFactory. A cut will not be fully priced in and no cut will force some to re-position, expect whipsawing.

As it is GBPUSD continues to hare around the charts like a demented whippet, expect more of the same.

Mon Pol summary and Rate decision at 12:00 today.

Note as well Carney speaks tomorrow at 1:00pm.

 



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Interesting!  A rate cut would work well for my Short position as it would further weaken GBP but is this what Carney wants or even alluded to?  I watched his speeches and I did not hear the fabled nod to a rate cut that the media has not stopped referring to.  He did talk about more liquidity, to the tune of 250 Bil I seem to remember, to help banks lend and in the same breath said he was worried about household indebtedness int he face of a potential recession (due to Brexit - NgNgNgNg).

 

The guy is all over the place and I agree with the commons committee challenge to him that he never should have commented on Brexit prior to the vote and I feel he should shut up now and just get on with his job.

 

My guess is that he announces that liquidity plan and no more at this stage.  I wonder if the FTSE is pricing in a rate cut that wont happen?  See my recent post of potential FTSE retrace turn back down...

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Chart of MPC voters and votes, good point re; difficult to see 5 or more suddenly switching to vote to cut today?

 



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You are still right that there will be volatility around it of course, perhaps especially on the FTSE?  Cable has rebounded back up off the 50% Fib, which could be just an early retrace of the move down or could be the beginning of a move higher to the next resistance level, who knows?  And who knows what the market is currently trying to price in regarding a rate cut or not and therefore what the impact of the decision will be...?  Can't make trading decisions based on this.

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Sorry to pip in here, but all fascinating stuff for a relative newbie like me.

 

Clearly trying to predict what the market will do intra-day today is a dangerous risk, I agree. However, do you both have preferred trades depending on the plausible scenarios, i.e.

 

rate cut to 0.25

rate cut to 0

no rate cut

 

Thanks

Pratt

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Just to add, when Carney spoke last time around, the FTSE shot through the roof; believe it was around 92 points in less than an hour.

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No need for apologies , piping in the whole point of the forum, I wish more people would.  I don't trade releases, unless they happen to coincide with a turning point I have already analysed out (e.g. the potential FTSE turn back down).  Even then I to see what the market price action is telling me and massive two way volatility or a sharp move (like Brexit day) make trading that extra hard.  I am a medium/long term swing trader and not a day trader so others may be able to help you more with this if you want to do it but here are my thoughts on trying to trade data releases (take or leave of course):

 

  1. Some people love the adrenaline of doing it but this seems more like gambling to me and must impact trading psychology (a big factor to get a grip on if you want to be a successful trader)
  2. Often the logical market response is not what you get (i.e. rate cut = GBP drop) why?  Various theories but the main one usually cited is that the action was already priced in
  3. So what is priced in?  Who knows?  Has a cut been driving the market down since Brexit volatility subsided and Carney gave his liquidity provision speech?  If so no cut means a rally.  Or has the market assumed no cut?  If so a cut drops GBP through the floor and all the other combinations will have you spinning around in circles.
  4. Finally, when major data is released you are trying to compete with the big high freq computer algorithm traders and you are just asking to get trampled in that arena.

Net for me at least, better to wait and see unless it hits a previously analysed trading trigger AND the data release changes nothing in terms of your analysis.

 

Hope that helps a bit at least.

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Yes, makes sense, thanks. Too many variables in the equation and we'll know in a couple of hours what the market really had priced in!

 

With regards to trading, I'm keen to explore all options at the moment. Swing trading sounds less of a gamble, I agree, and hence a bit more suitable to the rational trader (if there's anything like that?!). I'm still in the phase of deciphering a trading strategy that works (more often than not!) for me. So any advice you can provide will be much appreciated! :)

 

Great to see solid posts coming from people like yourself on here which helps trigger debate and provokes analysis.

 

 

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I like to set the bigger levels on the daily chart as potential targets. After the initial 30 - 1hr of whipsawing after data release has settled down and the local orders have all been taken out, price will then need to look to the next level where buyers/sellers might be waiting.

 

On the Daily GBPUSD those target levels are fairly obvious.

I then drop down to a 5 min chart for the actual data release, wait for bar sizes to settle and new direction becomes clear (if any) and only then look for an opportunity to get in.

 



 

 

 

 

 

 

 

 

 

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So there you have it , 2 very different trading styles and yet we still find value in discussions with each other, we take what is useful for our own methods and strategy but do not follow blindly.  This is a key lesson for me, do not seek to simply follow anyone blindly, you have to do your own research, analysis and have your own tailored method for entry and exit.  If you don't have this don't trade until you do.  Once you have a method test in on demo accounts to ensure it works and remember you will lose money, this is how we learn, so ensure you have sufficient to learn before you go bust...

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A lot is already ‘baked in’ I suspect, given how much a 25 bps cut has been expected. But why would you want to go all out this month when so much data is yet to arrive? Better, at least on the QE (or similar) front to wait until August and the Quarterly Inflation Report, or even into Sept/Oct when more figures are available?

 

The big risk is that they run out of options well before they’re needed.

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Well that was a LOL moment for me, all the "brains" in the market got it wrong and priced in a rate cut with no actual reason for it...  Makes you wonder about the "brains" and how much they get paid for this ****...

 

Re GBP new scenario (actually just the same options but confirmed now) we will see a rise to probably the Fib 38% (13800 region)

 

Re FTSE100, turned at my indicated point.  Hard to see this as a market topping turn but the FTSE could diverge from the US large Caps at this point.

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Blimey! Talk about surprises - this year keeps surprising at every available opportunity! Feels like someone's toying with everyone...

 

GBP definitely on the rise against the USD. Going to stick out of this one for the next 30 mins at least and see where it starts settling.. 

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It's heading up.  Check out the EURUSD as well...  The play for me is to stalk the eventual turn back into the bear market that I see as the long term trend.  Some commentators think that GBPUSD is at "fair value" whatever that means and the markets rarely if ever care about esoteric things like fairness and value after all...  I believe the trick to this is to spot the turn back down.

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 Looks like it's trending towards the 13500 Targets but probably still too early to say if it's likely to break out beyond 13450 space, which I reckon is short term resistance. What do you reckon is a good entry point?

 

 

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BoE's Market Carneyage and his 'forward guidance' have done it again. I was expecting extra volatility but wasn't quite expecting a 266 pip 20 second spike or the 3/4 retrace. Yes,   the 13400 level has become resistance and i would like to see a break and a retest of that level before entry for a retest of the top of the spike, see if price establishes support here at 13340. 

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In fairness to Carney, and I'm no fan, he never suggested anything about rate cuts in his speech.  He did talk about liquidity injection for banks "if needed" and also mentioned his concern about household indebtedness and the ability of households to withstand a recessionary environment, which did nothing to quell post Brexit nerves but that's a grip for another time.

 

The fact of the matter is that the media reported this idea of a "hint" of a rate cut and got it spectacularly wrong, as they often do on these matters.  The lesson for me is watch thee speech yourself and make your own mind up, as I did, and don't rely on the media to report things faithfully.

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Will wait to see if this breaches 13400 tomorrow but looks like it would ve been a solid day to trade this.

 

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Sorry   but we missed it (GBPUSD), price breached 13400 overnight then did indeed go on to retest the top of the spike as we discussed yesterday That's a good point about you make 'looking solid day to trade', it would have been if you knew the news in advance but if you look now you can see the indecision yesterday causing a drawn out symmetrical triangle and the break didn't actually come until the small hours. You need patience but sometimes even that is not enough.   

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