The Musings of Faith

fmfx:

Fundamental Analysis: Interest Rate Decision

The Bank of England (BOE) decision on short term interest rate is due to be published tomorrow (Jan 7). The decision on where to set interest rates depends mostly on growth outlook and inflation. The primary objective of the central bank is to achieve price stability. High interest rates attract foreigners looking for the best “risk-free” return on their money, which can dramatically increases demand for the nation’s currency.

A higher than expected rate is positive/bullish for the GBP, while a lower than expected rate is negative/bearish for the GBP.

Analysts predict that the rate will remain at 0.50%.

(the above analysis via Forexpros)

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Though the rate is expected to remain steady, traders will be looking for sentiment regarding the BoE’s quantitative easing (QE) policy. Any signs of exiting QE will be bullish for the GBP while any signs of prolonging or even extending the QE policy will be quite GBP negative.

I fully expect BoE minutes to be dovish - kinda like what we saw from FOMC - and the market will spike on GBP weakness on its release. The difference, however, is that the markets expect the BoE to be dovish. Market actually expected a more hawkish Fed. So I do not expect GBP weakness to last. The technical outlook poises both the GBP/USD and the EUR/GBP to gain further GBP strength especially as it turns out that the Federal Reserve is not so hawkish anymore and the EU is more debt-burdened and economically fragile than previously thought.

GAME PLAN

I am looking to short the EUR/GBP on any spikes. I have limit orders set up all the way to 0.9100 where a break of this whole number opens up price to the November 30/December 1, 2009 highs at 0.9150. Expect price, however, to find resistance and pause or reverse at 0.9050.

For the GBP/USD, I have limit orders set to buy the pair on GBP weakness. Keep an eye on support levels on cable at 1.5963 and 1.5934, the lows this week. I think GBP/USD will be unable to break and sustainbly hold below these levels and we see the pair rally.

As always, trade what you see, not what I think.

This decade has really been one of tremendous growth for me. At the end of 2009, I am at a place that I NEVER in my wildest dreams would have seen myself at 31 years of age. During the 2000s, The Noughties, I:

1. Experienced the joy and frustrations and joy of motherhood as I became a mother in 2002 with the birth of my daughter, Imani Finkley. That joy (and frustration and joy) became ampified with the birth of my only son, Jelani Finkley and my baby baby, Laila Finkley. These 3 people have been my BIGGEST inspiration of change in my life EVER. PERIOD.
2. Closed the chapter of my life as a child/student and entered real life graduating from Vanderbilt Univeristy in 2000 and from Georgia Tech in 2002.
3. Became a true son of God in 2005. I have always known about God and Jesus and all the Bible stories going to a Lutheran school up until high school (secondary school). But I came to KNOW Him, fasted for 40 days, and have never looked back. I am where I am and I am who I am today because of Him.
4. Changed my online identity from maryjane510 to faithmight (before the social media craze) when I changed my email from hotmail to gmail. My best friend recognized immediately what a big identity change that was for me at the time.
5. Entered my 30s and realized that I didn’t know a single thing in my 20s.
6. Married my college sweetheart and became a wife. My riskiest and most rewarding decision EVER. PERIOD.
7. Entered the social media fray starting then joining BlackTree TV, then joined Twitter and then Facebook. So many tremendous opportunities and connections have been had through these social media outlets in ways that I would have NEVER anticipated. My world became flatter, I have honed in on my passions, and I anticipate the capitalization on these opportunities and connections to be had in the new decade.
8. Found my passion in the capital markets after being introduced to forex trading in 2006. I hope to become more fully involved in venture capital, microfinancing and foreign exchange in a very unique cross-section of all 3 as this decade unfolds.
9. Discovered I am a really good teacher when I became a professor in 2006. I NEVER saw this coming and I really do enjoy imparting knowledge to students.
10. Became the first Zeta to walk the stage as an undergrad when I graduated Vanderbilt University in 2000. I am so proud to have established the Omnipotent Omega Pi chapter of Zeta Phi Beta Sorority Incorporated in 1999. We celebrated 10 years back in October 2009 and I realized that I helped make a lasting mark of history on campus. I love my Sorors!
11. Blessed and lucky enough to live in New Orleans BEFORE Katrina, live in New York BEFORE 911, live in Atlanta before all the construction that has changed the face of the city, and live in Italy before the euro.
12. Became an entrepreneur with the formation of my first business, BlackTree Enterprises, Inc. in 2002. I was CEO from 2002-2006 and saw the company through its formative years. My decision to step back from daily operations and serve in a more advisory role was a very difficult decision for me to make but the best decision for the company. BlackTree is experiencing tremendous growth right now and I am so proud to be a part of it.

I enter this new decade a little older and much wiser. I am a mother, a wife, a trader, a blogger, a professor, a Soror, and the light of the world. 2010 is The Year of Harvest. I like to think I spent the previous decade sowing good seed. This year, I fully expect a bountiful harvest and to see myself and others become great in this new decade. HAPPY NEW YEAR!

“Faith might do, accomplish, and create a lot. In fact, it does.”