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U.K. M4 Money Supply Increase Less Than Expected

Published 12/31/2000, 07:00 PM
Updated 12/18/2008, 05:30 AM

Release Explanation: Measurement of the value of cash, currency and cash assets held by the public. Monetary policy controls the supply and cost of money and credit. A central bank will increase the supply of money and decrease the cost of borrowing to stimulate an economy and vice versa to slow down an economy. While measuring the cost of borrowing is fairly easy (yield on Treasury Bonds), measuring the money supply can be a more daunting task.

Trade Desk Thoughts: In November, the M4 rose by £23.5 billion, or 2.3%, less than what analysts had predicted. Year over year, the M4 growth rate is standing at 16.3%. M4 lending increased by £17.8 billion or 0.8%, seasonally adjusted, in November. The twelve-month growth rate was unchanged from October, at 13.7%. The increase in the money supply numbers is a consequence of the recent rate cuts and the liquidity measures the BoE had taken in the last months.

Forex Technical Reaction: The cable spiked on the report, gaining approximately 100 pips in the 30 minutes following the release. The pair has recovered lost pips since the Asian session began and is currently trading flat.

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