Bank of England (BOE) minutes ahead

Keeping the guards up will bode well for the pound traders as the market prepare for the two important releases from UK today. We are going to discuss probabilities regarding the releases & what to expect.

The unemployment data & the BOE minutes will both be released at 9.30 am GMT. Pound is trading around 1.535 this morning.

1)     The Minutes-

a)     The market will search for any sign of dovish bias in the statement on the back ground of falling inflation. Latest data showed inflation drop accelerated to -0.9% mom. The MPC members as well as Mr. Carney shrugged of such in recent statements.

b)    The most important headline will be the votes by the member. Recently two hawkish members have restrained themselves in January, being hawkish since August 2014.

c)     Presence of any dove in the member & pound will suffer big against the dollar. Presence of hawks will be bullish for the pound but we highly doubt that on the background of falling inflation to have follow-through. Neutral will be less volatile and pound will continue to range trade with upward bias as long as 1.52 area holds. 

2)     Unemployment Rate-

a)     Despite the falling inflation unemployment rate has been encouraging. We believe the trend to continue. Without any big change, market will shrug-off any bad data and will focus on the minutes.

b)    Recent data from the BOE publishing shows that Labor market slack is lessening further.

Probable impact from some of the outcome is explained through the following table-