Are you ready for the readies?
The chances of a Bank of England rate cut are still around 50%. This means that this is an elevated chance of a surprise on Thursday. So here is a tip of how to deal with the rate announcement.
Sell on stop
A few minutes before the announcement place a sell on stop order on a GBP led pair. This is because you are wanting to sell the GBP in case of a Bank of England rate cut. Now, don't place the sell on stop order too close to the price. Instead, place the sell on stop order about 25-35 points below the price. Place your stop 10 or so points above the current price (So, a total of around 40-50 points). Now, if the price wobbles prior to the rate decision, just make sure you don't get pulled in. Keep dragging your order away so you are around 25-35 points below price. As a word of caution, do not try this with a buy on stop order as you may be triggered in by the bid/ask spread before price seems to get to you order level. You won't have the same issue with a sell on stop order.
Now, if the BoE do cut, you will be triggered in. Well done you.If you are a retail trader and you have a market maker you may get an excellent fill (sometimes market makers actually give
very good fills, despite what you might think, as they can provide their own market in cases of volatility). I had a great run with a market maker broker for awhile. If we get a rate cut then a fall of around 150 points on the GBPUSD should be in order.
If we don't get a cut then check to see the forward guidance from the BoE as they may signal a cut coming. At any rate, get ready for a potential surprise for the GBP on Thursday and try my tip.
