Archived IMT (2009.11.17)

Tomorrow's MINUTES BANK OF ENGLAND's November MPC meeting will make the case for the decision to raise QE by only 25 bln rather than 50 bln. Part of the reason to go with 25 bln has been a short term rise in inflation, before ultimately retreating below target. MORE IMPORTANTLY, watch for the breakdown of the MPC vote. If the decision was unanimous (9-0) then sterling could push higher on the rationale that all members wanted a more conservative increase in QE. If the number of dissenters (asking for 50 bln) was as many as 3 or 4, then GBP could be dragged lower, especially if stocks are under pressure at the time. Also, bear in mind the risk that the dissenters would have opted for no increase in QE at all, which could be negative. While failing to regain $1.6880 (Aug 4 low), Cable is seen supported at $1.6680 ahead of the minutes.