How to Trade on the Bank of England Meeting
The Bank of England surprised investors at its last meeting with a significant easing. Here's how to trade this week's get-together.
Sure, the news from Europe is major, but don't forget the upcoming Bank of England meeting. It could generate a nice trading opportunity, says Andrew Busch, global currency and public policy strategist for BMO Capital.
"If you look at the economy, it's extremely weak," Busch told CNBC's Melissa Lee. Britain was even "just downgraded by their own country," he says, alluding to a lowered growth forecast from the Office for Budget Responsibility.Meanwhile, some 40% of British exports go into the euro zone, and with the crisis there continuing, that can only hurt.
In the same vein, the latest British manufacturing data came in weaker than expected.
All of this could add up to a surprise at this week's Bank of England meeting, Busch says, given the bank's easy-money policies.
In technical terms, the British pound is in "a decent downtrend channel," Busch says. So putting that all together, he wants to sell the pound against the dollar at 1.5850 with a stop of 1.6000 and a target of 1.5050.
You can watch the whole discussion in the tape.Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm and repeats on Saturdays at 7pm. Learn more: The essential vocabulary for currency trading is on Key Currency Terms. Top currency strategies are broken down for you in Currency Class.
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