Sterling trades soft ahead of the earlier.....>

CABLE: Sterling trades soft ahead of the earlier than usual BOE MPC MonPol

announcement(this morning at 0600GMT). Cable extended easing in early Asia, to

$1.2311 with recovery efforts holding below $1.2330(May06 low $1.2335). EUR/GBP

also reflects the softer tone as the cross has extended its recovery off recent

lows of Gbp0.8690 to Gbp0.8767(61.8% Gbp0.8814-0.8690), as well as closing back

above its key technical 10-dma(current level Gbp0.8737). Cable support seen

between $1.2308/1.2298, a break to open a deeper move toward $1.2275 ahead of

$1.2250. Resistance noted into $1.2350 ahead of $1.2390/1.2400. 

- BOE: Having already announced a decent sized easing package and with the gilt

market not appearing to be under undue stress, the pressure on the BoE to ease

further at this week's meeting is limited. However, given the likelihood that QE

is increased in the future to accommodate the large stock of issuance in the

pipeline, the BoE could opt to get ahead of events and announce an expansion

now. At the very least the MPC will indicate a readiness to use all policy

levers at their disposal and will reaffirm their commitment to supporting the

recovery and meeting the inflation objective.