Hi!!

You've seen it, haven't you?

That about GBPJPY.

Have you seen where GBPUSD has stopped so far: 1,9757.

Attached Images

GBPJPY.jpg (164.1 KB, 278 views)

__________________
Nina

We must fight on the winning side, not on the side we may believe to be correct.

Focus, Patience and Discipline

Hi!!

Line in the sand on GBPUSD: 1,9590.

Do not forget that.

__________________
Nina

We must fight on the winning side, not on the side we may believe to be correct.

Focus, Patience and Discipline

HI!

It is like I see you all: counting your money

__________________
Nina

We must fight on the winning side, not on the side we may believe to be correct.

Focus, Patience and Discipline

I forgotwhat the line in the sand means?

Hi!!

Low so far on cable:

__________________
Nina

We must fight on the winning side, not on the side we may believe to be correct.

Focus, Patience and Discipline

Hi!

You will not believe that, but my CatFX2 gave me a sell signal on cable at 1,9813 with stop at 1,9830.

And it gave me too a sell signal on GBPJPY at 241,03 with stop at 241,40.

Cable has made a low at 1,9695 : + 118 pips.
GBPJPY has made a low at 237,96 : + 307 pips.

Total of pips signals have given: + 425 pips.

CatFX2 closed them at 1,9745 on cable : + 68 pips and at 238,20 on GBPJPY : 283 pips.

Total : + 351 pips.

__________________
Nina

We must fight on the winning side, not on the side we may believe to be correct.

Focus, Patience and Discipline

Publication date: 24 January 2007
MINUTES OF
MONETARY POLICY
COMMITTEE MEETING
10 & 11 JANUARY 2007
These are the minutes of the Monetary Policy Committee meeting held on
10 & 11 January 2007.
They are also available on the Internet
http://www.bankofengland.co.uk/publi...07/mpc0701.pdf
The Bank of England Act 1998 gives the Bank of England operational responsibility
for setting interest rates to meet the Government’s inflation target. Operational
decisions are taken by the Bank’s Monetary Policy Committee. The Committee meets
on a regular monthly basis and minutes of its meetings are released on the
Wednesday of the second week after the meeting takes place. Accordingly, the
minutes of the Committee meeting held on 7 & 8 February will be published on
21 February 2007.
MINUTES OF THE MONETARY POLICY COMMITTEE MEETING HELD
ON 10-11 JANUARY 2007
1 Before turning to its immediate policy decision, the Committee discussed developments in
financial markets; the international economy; money, credit, demand and output; and supply, costs
and prices.
Financial markets
2 In the United Kingdom, the United States and the euro area, short-term interest rates had risen by
around 30 basis points since the Committee’s December meeting and longer-term forward rates had
risen by 10-30 basis points. Interest rates had risen steadily over the month and there had been no
obvious single explanatory factor. In the United Kingdom, market prices were now consistent with a
further increase of 25 basis points in Bank Rate in the next few months and a relatively flat profile
thereafter. Expectations for interest rate increases in the euro area had also firmed and expectations of
cuts in the United States had diminished somewhat.
3 Foreign exchange rates were little changed on the month. The sterling effective exchange rate
index (ERI) had remained near the top of the range it had occupied for the previous decade. Estimates
published by a number of economic commentators were all consistent with a long-run equilibrium
exchange rate below the current level.
4 The major equity market indices in Europe and Japan had risen again on the month, despite
rising real interest rates. There had been general buoyancy in asset prices, which some thought partly
reflected the expansion in global liquidity and credit. Relatively low interest rates, for example in
Japan and Switzerland, might be helping to fund cross-currency investments into higher yielding
assets, with investors assuming that low exchange rate volatility would persist, as implied by options
prices.
5 Estimates of the equity risk premium seemed not to have declined in line with the continuing
compression of spreads for more risky fixed-income assets. One possible explanation of this could
have been the strong income growth and high saving rates in Asian countries which tended to invest in
fixed-income securities rather than equities.
2
The international economy
6 The news on the world economy during the month pointed to continued growth in the United
Kingdom’s major overseas markets. Survey and official data for the euro area in the fourth quarter had
been consistent with GDP growth slightly above trend. The apparent weakness in German retail sales
growth in 2006 remained a puzzle given the increase in VAT that had been announced for the start of
2007. But stronger employment growth in Germany seemed likely to support household income and
hence future consumption spending.
7 In the United States, the fall in home sales had shown some signs of leveling off and there was
little evidence of a significant spillover from the weak housing market to consumption. Employment
growth was particularly robust in the fourth quarter and this would support consumption. The Institute
of Supply Management (ISM) manufacturing survey index for December had been consistent with
some degree of expansion in output. The ISM non-manufacturing index had eased slightly, but
remained high. GDP growth in the fourth quarter seemed likely to be firm. It now seemed more
probable that the United States would experience only a modest overall slowdown in growth,
concentrated in residential investment and the auto sector.
8 The spot price of oil had fallen by nearly 18% on the month, reflecting unusually mild winter
weather in the United States and high stock levels. In the previous week the prices of several metals
had fallen. In the euro area, the flash estimate of HICP inflation for December was for an unchanged
rate of 1.9%. US CPI inflation had picked up to 2% in November, from 1.3% in October, as the
negative effect from lower energy prices diminished. Falling US unemployment might presage greater
wage pressures, but the relatively high profit share in the United States suggested that any pickup in
pay growth might not feed directly into higher prices.
Money, credit, demand and output
9 The level of UK GDP had been revised up by some 0.2%, though the estimated quarterly growth
rate in the third quarter had remained at 0.7%. Within the expenditure components, the levels of
consumption and whole economy investment had been revised down, while the levels of net trade and
business investment were higher.
3
10 In December, the CIPS/RBS business activity index for services had recorded a balance of 60.6,
its highest level since June 1997. The Bank’s regional Agents had also reported slightly stronger
service sector output growth. However, the weighted number of profit warnings from service sector
businesses had increased further in the fourth quarter, although it was not clear whether this indicated
something about the level of overall activity, or other factors such as unexpected cost increases.
11 Manufacturing growth in the fourth quarter looked to have been weaker than earlier in the year.
Data from the Office for National Statistics (ONS) had recorded a fall in output in October which was
largely reversed in November, but the CIPS/RBS survey balance had eased further in December.
Taking monthly manufacturing and services data, business surveys and the Agents’ reports together
suggested that Q4 GDP growth would be close to its longer-term potential rate.
12 Expenditure indicators for the fourth quarter indicated reasonably robust growth. Retail sales
had risen by 0.5% in the 3 months to November. And a survey by the Agents had suggested that sales
in December had been higher than a year earlier. In the housing market, the average of the lenders’
house price indices was up 3.7% in the fourth quarter and 9.5% in the year to December. The quantity
indicators gave more mixed signals: loan approvals were high, but the Royal Institution of Chartered
Surveyors’ survey balance for new buyer enquiries had continued to fall. The ratio of house prices to
earnings remained well above its long-run average although it remained difficult to know how much of
this could be justified by a fundamental shift in demand relative to supply.
13 The annual growth rate of broad money (M4) had slowed to 13% in November, but overall credit
growth (M4 lending) had picked up to 16.5%. Nominal domestic demand growth had picked up
during the course of 2006.
Supply, costs and prices
14 The latest Labour Force Survey data, for the three months to October, showed the employment
rate stable at 60.1%, and the unemployment and participation rates as having ticked down to 5.5% and
63.6% respectively. A measure of weighted non-employment appeared to have stabilised in the past
few months. On the supply of labour, there was little indication that the extent of inward migration
would diminish in the near term and there probably remained a degree of slack in the labour market.
4
15 Survey measures of capacity utilisation in manufacturing and services, weighted together to
produce whole-economy estimates, suggested that the degree of spare capacity within firms had been
diminishing. The reports of the Bank’s regional Agents had been consistent with a continued
reduction in spare capacity in both manufacturing and services firms in the fourth quarter.
16 There had been little new information on settlements and earnings. Regular pay growth had
picked up to 3.8% in the three months to October. In November, settlements had remained unchanged
at 3%. A report from Income Data Services (IDS) had recorded that the first few settlements in 2007
had produced a median settlement of 4%, compared with a median of 3% in the fourth quarter of 2006.
But these early settlements related to only 10% of the employees normally covered by January
agreements and they included the later stages of some multi-year agreements.

17 The annual rate of inflation in manufacturers’ input prices had fallen further in November and
output price inflation had been broadly stable. CIPS/RBS survey measures for December had
indicated that input price inflation had continued to diminish in both manufacturing and services. But
the survey balances for output price inflation in services had picked up a little in December, in contrast
to the manufacturing sector, perhaps reflecting the relative growth of demand.
18 In line with pre-release arrangements, an advance estimate of CPI inflation of 3.0% in December
had been provided to the Governor ahead of publication. That compared with 2.7% in November.
Part of the rise in the inflation rate could be explained by petrol prices having risen this December
while having fallen in December 2005. Analysis of the data had to wait until publication but, since the
summer of 2006, the Committee had been projecting a sharp pickup in CPI inflation during the autumn
and winter months before falling back towards the target in 2007 as energy and import price inflation
moderated. Although that pickup had occurred, it appeared that there had been some news:
lower-than-expected contributions, for example, from energy and university tuition fees, had been
offset by a broader range of price increases, especially for food.
5
The immediate policy decision
19 The world and domestic economies had evolved largely as the Committee had projected in the
August and November Inflation Reports but the recent data had suggested that the balance of risks
might have shifted. In particular, the risk of a greater slowdown in the United States, arising from a
weakening housing market, had diminished. Overall, the world economy appeared to be robust and
the downside risks appeared to have diminished somewhat.
20 There had been a further significant fall in the spot price of oil, which was probably explained by
unusually mild weather and high stock levels. If sustained, the lower oil price would help to contain
inflationary pressures in oil-consuming countries, as well as supporting demand growth going forward.
21 There had been little news about the path of domestic output growth. The level of GDP had been
revised up a little and, within that, the level of consumption was estimated to be a little lower and net
trade and business investment a little higher. The Committee placed little weight on the early
estimates of the expenditure components.
22 In aggregate, the data were broadly consistent with the November Inflation Report projections.
But the CIPS/RBS business surveys and the Agents’ reports both suggested some upside risks to shortterm
growth. And the retail sales indicators for the fourth quarter had been robust, perhaps suggesting
less downside risk of a further slowing in consumption growth. Broad money and credit growth
continued to be very strong and asset prices were buoyant across the board.
23 The Committee considered whether the high level of asset prices should be a concern for
monetary policy. There could be some risk arising from a direct pass through of higher asset prices to
household wealth and hence into the demand for goods and services. There could also be some risk of
a sharp reversal in asset prices although, to the extent that they were reflecting ongoing fundamental
changes in the global economy such as growth in China, it was perhaps unlikely that they would
unwind soon. Some members argued that the strength of money, credit and asset prices could
influence the nominal side of the economy, for example, by influencing inflation expectations. That
strength could be an indicator of incipient inflationary pressures.
6
24 The labour market had developed largely as the Committee had expected. The quantity
indicators showed a broadly stable picture and there was little evidence yet of any change in wage
settlements or pay growth. The Committee noted the high median pay settlement recorded by IDS, but
it was too early to tell what would happen with January settlements overall. It was likely that there
was some continuing slack in the labour market, but the increase in retail price inflation posed an
upside risk to pay growth.
25 The available survey evidence on spare capacity within firms had suggested that this had continued
to tighten. The Agents had reported an increased readiness of retailers to push through price increases,
particularly for foodstuffs. Investment growth had been strengthening, perhaps encouraged by the
increased supply of labour as well as by robust demand, but it would take some time for new fixed
investment to relieve capacity constraints.
26 In its August and November Inflation Reports, the Committee had anticipated a short-run spike
in CPI inflation, falling back during 2007. While the outturn for CPI inflation had been close to the
Committee’s projections during the autumn, some members thought that there seemed to be more
underlying inflationary pressure in the short run than previously expected. Looking back over 2006 as
a whole, the outturn for GDP growth looked set to be very close to that expected in the February 2006
Inflation Report, but CPI inflation was materially higher than projected at that time. Some of that
surprise could be accounted for by the effects of unexpected energy price increases. Another
unexpected increase had come from the rise in fuel duty. One possible explanation for the extent of
upwards pressure on inflation was that profit margins might have been initially squeezed by higher
energy prices in the face of some weakness in demand in 2005. As demand growth had recovered
through 2006, firms might have sought to raise profits by increasing prices.
27 Although the Committee had received advance notification of the December CPI release on the
morning of its meeting, it had not had been able to analyse in detail the reasons for the sharp increase
in inflation. The central projection in the November Inflation Report had been for CPI inflation to fall
back towards the target during 2007, as energy and import price inflation moderated. Some members
thought that the balance of risks to this central case had now shifted to the upside. A risk for the
medium-term was the possibility of dislodging inflation expectations. With RPI inflation likely to be
nearly 4½% in December, the Committee noted that it was important that wage negotiators did not
accommodate what should prove to be a temporary spike in inflation.
7
28 On the policy decision, the Committee noted that an immediate change in Bank Rate would
clearly be a surprise to financial markets. Market prices indicated that a rate rise of 25 basis points
was expected, but not until February. This probably reflected the fact that the Committee had not
changed interest rates other than in an Inflation Report month for some 2½ years.
29 The Committee agreed that, although the news on the month had been broadly in line with its
central projections, the balance of risks to the outlook for inflation had shifted upwards. There was a
range of views amongst the Committee over the new balance of risks and over whether the news had
been sufficient to warrant an increase in Bank Rate this month or whether it would be better to wait
and judge the news in the context of the Committee’s February Inflation Report.

30 For a majority of members there was already sufficient evidence to justify an increase in Bank
Rate and no compelling reason to delay. The world economy was robust, nominal domestic demand
was growing strongly and real output growing at least at its potential rate. Spare capacity had
diminished and inflation had been rising as it had become easier to increase prices. For these members
there was a significant risk that inflation would not fall back as quickly as the Committee had expected
in its central case in the November Inflation Report and little risk that an increase in interest rates
would cause an unnecessarily sharp slowdown in activity. There was a risk that the 50 basis points
rise in Bank Rate since August might not be sufficient to keep demand and inflation expectations in
check and an early increase in rates might prevent larger increases later. For some of these members,
the fast pace of money and credit growth and buoyant asset prices gave additional concerns about
upside pressures to inflation.
31 For other members, there was insufficient news to warrant an immediate increase in Bank Rate.
Although the upside risks had increased, the most likely prospect was that inflation would fall back
later this year. The Committee should not be interpreted as reacting to short-term volatility in CPI
inflation. It was difficult to know how informative the current inflation rate was, given sharp
movements in volatile components such as energy and food. The Committee had already raised rates
by 50 basis points since the summer. If new data made it clear that it was necessary to increase Bank
Rate further then it would help to have the Inflation Report to explain why in the context of the
medium-term prospect. In the meantime, the recent increase in CPI inflation would add to the risks in
the current wage round, and so it was important to communicate clearly that the Committee would act
8
if pay accelerated or inflation expectations were threatened. But an increase in Bank Rate this month
ran the risk of prompting an excessive monetary tightening by shifting up market interest rates.
32 The Governor invited the Committee to vote on the proposition that Bank Rate should be
increased by 25 basis points to 5.25%. Five members of the Committee (the Governor, John Gieve,
Kate Barker, Tim Besley and Andrew Sentance) voted in favour of the proposition. Rachel Lomax,
Charlie Bean, David Blanchflower and Paul Tucker voted against, preferring to maintain Bank Rate
at 5.0%.
33 The following members of the Committee were present:
Mervyn King, Governor
Rachel Lomax, Deputy Governor responsible for monetary policy
John Gieve, Deputy Governor responsible for financial stability
Kate Barker
Charles Bean
Tim Besley
David Blanchflower
Andrew Sentance
Paul Tucker
Jon Cunliffe was present as the Treasury representative.

Hi!!

Thank you, Smooth.

What a day today, mates. What a day!!!!

GBPJPY has moved more than 1.000 pips today. Yes, 1.000 pips.

From high to low, it has gone down 395 pips. My god!!!

So, newbies, you undrestand now why I posted a WARNING.

Do you remember now that 1,9590, that line in the sand on cable?

__________________
Nina

We must fight on the winning side, not on the side we may believe to be correct.

Focus, Patience and Discipline