Sterling Traders Fail to Capitalize on News-Based Events Due to Market Structure and Execution Delays

The pound's reaction to news-based events is often underwhelming for retail traders. A typical scenario involves a Bank of England rate decision, where the market moves significantly before the announcement. Institutional desks with direct data feeds have already incorporated the expected outcome into their positions by the time the decision is made.

For example, when the Bank of England announces a rate decision, the pound often moves 40 to 60 pips in seconds. However, this move has already been factored into the market by institutional desks, leaving retail traders chasing a price that has already moved.

The information contained in headlines is absorbed by institutional desks quickly, and the quote visible on a retail platform reflects the market's repositioning after the news has broken. This means that retail traders are often reacting to a price that has already moved, rather than the actual event.

Additionally, scheduled events such as rate decisions, ONS data releases, and fiscal statements have their impact priced in before they happen. The market spends weeks building positions around expected outcomes, making it difficult for retail traders to time entries effectively.