Predicting The Bank of England Interest Rate Decision: May 7, 2012

BOE (Bank of England) will be rendering its interest rate decision today, and it would provide strong volatility in the market if BOE´s final decision turns out to be a surprise, here´s the forecast:

7:00am (NY Time) UK Official Bank Rate Forecast 0.50% Previous 0.50%
APT (Asset Purchasing Target) Forecast 325B Previous 325B
DEVIATION: 0.25% interest rate / 25B Pound for APT
(BUY GBP @ +0.75% rate /  SELL GBP @ +350B APT)

The Trade Plan
In the extremely unlikely event BOE hikes rate to 0.75%, we´ll buy GBP/USD immediately on a spike trade. Because of the level of this surprise, I think we´ll see a strong trend change for GBP in the next few weeks, so we should BUY and keep a small portion for larger gains… On the other hand, if we get a surprise increase to 350B or more in the APT or better known as quantitative easing, it would send an even more bearish signal to the market, and we should SELL GBP/USD immediately. The best course of action would be to follow the recommended pairs above using CSM, or you can just trade the default pair GBPUSD.

I´ll be trading this release using my Spike Trading Method, for more information read:
http://www.henryliuforex.com/how-to-get-started-with-news-trading/

Definition:

(From Wikipedia) The official bank rate (also called the Bank of England base rate[1] or BOEBR) is the interest rate that the Bank of England charges Banks for secured overnight lending. It is the British Government’s key interest rate for enacting monetary policy.[2] It is more analogous to the US discount rate than to the Federal funds rate. The security for the lending can be any of a list of eligible securities (commonly Gilts) and are transacted as overnight repurchase agreements. When an announcement of the change in interest rates is made this is the rate the Bank of England is changing. Changes are recommended by the Monetary Policy Committee and enacted by the Governor.