United Kingdom M4 Money Supply (MoM) meets expectations (0.3%) in December

💡 DMK Insight

The UK M4 Money Supply hitting the expected 0.3% in December is a key indicator for traders: This stability suggests that the Bank of England’s monetary policy is on track, which could influence interest rates and, by extension, the forex markets. A consistent money supply can lead to a stronger pound if it signals economic stability, but it also raises questions about inflation and future rate hikes. Traders should keep an eye on how this data interacts with upcoming inflation reports and employment figures, as these will be crucial for gauging the BoE’s next moves. However, there’s a flip side: if inflation continues to rise despite stable money supply growth, it could lead to tighter monetary policy sooner than expected, creating volatility in GBP pairs. Watch for key levels around recent highs and lows in GBP/USD and EUR/GBP for potential breakout or reversal signals. The immediate focus should be on how the market reacts in the coming weeks, especially with any shifts in sentiment around the BoE’s policy stance.