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.
Trade Desk Thoughts: In January, the M4 rose by £48.5 billion, or 2.5%, more than what analysts had predicted. Year over year, the M4 growth rate is standing at 17.5%.
M4 lending excluding the effects of securitizations and loan transfers increased by £10.7 billion, seasonally adjusted in January. The twelve-month growth rate fell to 15.1% from 15.9% in December. The increase in the money supply numbers is a consequence of the recent rate cuts and the liquidity measures the BoE had taken in the last months.
Forex Technical Reaction: The pound rose 150 pips tonight, breaking above the 20-day simple moving average for the first time in the last few days. Against the euro, the pound traded flat tonight.