Navigating Economic Turbulence: An Overview of Money Policy and What Traders might want to consider if you are trading the Pound!

In a world of constant change and unpredictability, understanding how monetary policy affects volatility and (PIP) movement is always important. Let’s dive into economics and create thoughts for the action-ready trader.
The Balancing Act
Imagine the Bank of England as a tightrope walker, balancing high above a bustling city. On one side, there’s the risk of pushing the UK economy into a full-scale recession by tightening the money supply, while on the other side, there’s the challenge of bringing down the inflation rate to a stable 2%. Huw Pill, the Bank’s chief economist, recently shared with an audience that there might still be work to do to reduce inflation further. But in this ever-changing global environment ( There are 2 military wars and recession threats), they need to stay nimble.
Question: What does the above mean for a trader seeking to go long or short on a GBP Pair?

Inflation: A Rollercoaster Ride

The latest numbers from the Office of National Statistics show that inflation is like a rollercoaster. In September, the consumer price index was at 6.7%, staying steady from the previous month. It’s like a see-saw; some things, like food prices, are going down, while others, like petrol and diesel, are pushing inflation up.
For now, it seems like the Bank of England is keeping interest rates steady at 5.2%. But remember the BOE’s goal is 2%
Question: How would the above affect your trading point of view?
The UK’s Inflation Challenge
Among the world’s major economies, the UK’s inflation rate is still the highest. There are some elements of inflation that are here to stay in the long run. These “persistent components” are linked to how prices are set within the country and how wages are determined.
Question: How confident does this make you feel in the GBP is a trading pair?

Summary:
I can keep listing these points but my real goal here is to share a little education on what you should be thinking about if you truly want to enter the world of trading.
DM any questions
Sam Onigbanjo
Capital Markets Academy