BoE Vote 6-3 for more QE - Gilts Spike

There was an unexpected outcome from the BoE minutes as the vote for more QE was 3 - 6 against, this is up from the 1-8 decision that has been the norm of late.

From the economist:

The Bank of England's Monetary Policy Committee was split 6-3 on more bond purchases earlier this month, unexpectedly reviving the prospect that the central bank might restart its quantitative easing programme.


Bank of England governor Mervyn King, executive director for markets Paul Fisher and external MPC member David Miles all voted for an increase in the central bank's bond purchases to 400 billion pounds from 375 billion pounds.

The last time there was a similar 6-3 split on the MPC was in June 2012, and the following month a majority of the MPC backed a 50 billion pound increase in asset purchases.

In recent months, only Miles had supported more bond purchases.

We had a big move in the GILT and GBP/USD, although we faded the whole of the move in the GILT.

As we can see cable dropped from 1.5430 to sub 153! where as the GILT spiked 120 ticks in 3 minutes before fading the whole move. This was despite good employment figures which was released at teh same time.

Of the back of this I tried shorting all the spreads in the Short Sterling strip as there were at the top of the ranges, but as we faded the selling in the spreads didn't materialize as well so ended up with mainly scratches  But this was a welcome bout of volatility in Short Sterling as its been like watching paint dry recently!