about 4 years ago • 2 mins
The central banks of the UK and Japan both kept interest rates steady on Thursday (read more about this in our Central Banks Pack). But data breach bombshells were less expected… 😳
While its newly elected government means the UK now looks set for an orderly Brexit, the Bank of England is reluctant to gamble on a subsequent boost to economic growth. And it was also reluctant to admit that an unnamed provider of audio feeds from previous press conferences had released them to clients five seconds earlier than authorized.
The Bank’s updates can have a major effect on the value of British investments and currency – and with the pound particularly volatile these days, a head start could let currency traders make a killing.
“High-frequency traders" live or die on fast access to financial data. Using high-powered computers to place large trading orders, such investors can make massive profits from even small price movements. It’s a risky strategy – but less so when you know you’re getting sensitive data whole seconds ahead of everyone else 😏
Some argue that even honest high-frequency trading pinches pennies from those lacking algorithmic assistance. But it’s also credited with reducing trading fees – which is good for your returns. Indeed, the likes of Charles Schwab have recently scrapped such fees altogether. (Check out our Pack on Choosing A Broker for more.)
While the UK central bank’s revelations thrust high-frequency trading into the limelight, it’s worth remembering the importance of Thursday’s main announcements both there and in Japan. With interest rates remaining higher in the US, investors may flock Stateside – potentially pushing the value of the dollar up and making American goods more expensive for overseas buyers. Read all about that in our Currency Trading Pack 😝
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