BoE's £50 Billion QE Announcement Could Offer an Ideal Trading Opportunity

LONDON, July 5, 2012 /PRNewswire/ --

On Thursday, July 5, the Bank of England announced that it will be pumping another £50 billion into the UK economy, while leaving interest rates steady at a historic low of 0.5% for the 39^th month in a row.

Thursday's announcement of further QE is likely to soothe investor nerves, reinforcing optimism that the flagging UK economy can turn around, while further pressuring sterling against a basket of currencies, including the euro, US dollar and Japanese yen.

Below, we look at how you could trade following the announcement with a Finspreads spread betting account.

Events such as today's Bank of England QE announcement can offer spread bettors the ideal trading opportunity, enabling them to profit from both moves in the run up to the announcement or indeed knee-jerk reactions in the markets following the release of key economic data.

Investors are now keenly awaiting the release of the non-farm payrolls report (a key indicator about the health of the US economy) in the US on Friday 6 July.

You can profit from market reactions to key economic events

Spread betting is an alternative to conventional trading, whereby investors can speculate and potentially profit from moving market prices, irrespective of whether prices go up or down.

For example, following today's announcement, if you expected the additional QE to provoke a move higher among indices while forcing sterling lower, you could take a buy position on the FTSE 100 while selling sterling against the US dollar (going short GBP/USD).

If you were right and the markets moved in the direction you had anticipated (i.e. the FTSE climbed higher, while sterling fell against the US dollar), you would net a profit. If, however, you were wrong and the markets moved in the opposite direction (i.e. the FTSE fell or sterling rose against the US dollar), you would net a loss.

Spread betting is a leveraged product which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

Learn how to spread bet a basket of currencies with financial spread betting provider Finspreads.

Summary

Spread betting is a tax-free* alternative to conventional trading, enabling you to make a profit from knee-jerk market reactions to events such as these. Find out more about the benefits and risks of spread betting.

*Spread betting is exempt from UK stamp duty and Capital Gains Tax (CGT). However, tax laws are subject to change and depend on individual circumstances. Please seek independent advice if necessary.

About Finspreads:

Finspreads is a leading online financial spread betting  firm, offering access to thousands of instruments on the world's financial markets.

The company pioneered fully interactive online spread betting in 1999 and continues to invest in technology to ensure that its service remains amongst the market leaders.