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How to Trade the European Central Bank Meeting

European Central Bank
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European Central Bank

Almost everyone expects the European Central Bank to raise rates this week, but you can still trade on it. Here's how.

There is not much suspense among European Central Bank watchers this week. The bank is widely expected to raise interest rates at the conclusion of its meeting.

Bank of England watchers are also pretty sure they know what's coming from its meetings: nothing. So if everyone is confident of what's coming, what's an investor to do?

Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, has an idea. "If it's priced in, what do you do? You look at guidance," she told CNBC's Scott Wapner. In other words, trade on the tone of the bank announcements.

Patterson expects European Central Bank President Jean-Claude Trichet to maintain his hawkish tone, and she expects the Bank of England to remain dovish, and "That alone is going to help give euro sterling a bit of a lift."

That means there is a trading opportunity using the euro and the British pound. Patterson recommends waiting for a pullback in euro-pound and buying at 0.8960 with a top of 0.8870 and a target of 0.9200.

Andrew Busch, global currency and public policy strategist for BMO Capital, agrees with Patterson's negative view on the pound. As for the euro, "I don't expect a lot out of the ECB, but they'll maintain that hawkish tone," he says.

You can watch the whole discussion right here, starting at 2:45.

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