Forex Analytics from LiteForex of 03.11.10: GBP: British Pound determines movement direction

At the Forex currency market on Wednesday the British Pound Sterling rate is traded slightly downward being in the range of 1.6015-1.6055 for three days. External background does not encourage to movement today – at least until the evening when the U.S. Federal Reserve decision will become known.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and it goes up, confirming a previous buy signal for the pair. Stochastic Oscillator has not indentified a clear signal today.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6010 the pair will go to 1.5970 and 1.5930. If the level of 1.6050 is exceeded, buyers’ target will be the levels of 1.6070 and 1.6090.

It became known today that consumer prices in Great Britain increased by 0.2% (+2.2% y/y) in October as per BRC estimation against the growth by 0.2% m/m (+1.9% y/y) in September.

Thus, prices in the UK stores continue to grow, the cost of food went up to 17 month high.

Posen, representative of the Bank monetary committee pointed earlier that the rise in inflation above the target level even by 1% will not be crucial and it will take some time – longer than previously expected to set quantitative easing of monetary policy. Posen does not believe that additional stimulation is required for the British economy now. The head of the Bank of England Mr. King noted that the draft Basel III which has been discussed last month will not become a miracle cure for the new round of financial crisis. However according to the monetary politician, British regulator will not force banks to comply with the contract although he holds more stringent views on the problem.

It became known earlier that asking prices for houses reduced by 0.9% m/m (-0.1% y/y) as per Hometrack estimation. Economists pointed that pace of decline accelerated after some stagnation while the annual rate of decline had been observed for the first time in January this year. It became known last week that the UK houses prices as per Nationwide estimation continued to decline in October and fell by 0.7% on monthly basis (+1.4% y/y). Nationwide economists point that if the trend which started in the early summer continues in November and December, the prices will have chances to drop by 1% by the end of the year.

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