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U.K. M4 Money Supply Actual 0.1%, Expected 0.5%, Previous 0.3% (Revised from 0.0%)

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,” TheLFB-Forex.com Trade Team said

TheLFB-Forex.com Trade Desk Thoughts: In April, the M4 rose by £2.9 billion, or 0.1%, much lower than what analysts had predicted. Year over year, the M4 growth rate is standing at 17.4%. M4 lending decreased by £11.9 billion or 0.5% in April. The twelve-month growth rate fell to 10.4% from 12.5% in March.

“The increase in the money supply can be seen as a consequence of the recent rate cuts and the liquidity measures the BoE has taken, but the gains are still modest when compared to the BoE’s actions,” TheLFB-Forex.com Trade Team notes.

Forex Technical Reaction: The pound plunged 200 pips shortly ahead of the release, as the S&P downgraded the outlook of the U.K. economy.

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