GBP: British Pound continues to decline

At the Forex currency market the British Pound Sterling carries on the decline on Tuesday which started yesterday because investors have been moving away to safe harbours amid decreased interest in risk.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and is growing, however volumes are dropping which indicates that a buy signal is fading. Stochastic Oscillator is going down in the neutral zone today, giving a pair sell signal.

Forex recommendations: in case of breakdown at the level of 1.6440 the pair will go to 1.6410 and 1.6380.
Important UK news are not going to be published today, therefore, external background will remain the main movement driver. Data on GDP in the UK will be presented tomorrow which will enhance volatility in the Pound. 

According to the representative of the Bank of England Mr. Sentence, inflation in Great Britain can exceed the level of 5% soon. He believes that inflation will go up during the summer. “If we wait until all signals of inflation will turn from flashing yellow to red, it will be too late to raise interest rates from the accommodative level” he stressed in his interview to the foreign news agency.  

Minutes of the last meeting of the Bank of England released earlier showed that balance of power in the Monetary Committee remained unchanged: 6:3 and the regulator still has no intention to start monetary tightening policy.

It is unlikely that the rate will be raised before July-August this year.
Current budget of the UK, excluding intervention in the financial sector, showed deficit in the amount of 10.442 billion pounds in March against 11.468 billion pounds a year earlier.

The data released last week showed that consumer confidence in Great Britain increased to 44 points in March, as per Nationwide study, against the level of 39 points in February. At the same time index of expenditure rose to 66 points versus the previous level of 53; expectation index went up to 66 points against the 51 previously. Therefore, confidence index in the UK has moved away from the lows, which is a positive factor for the British economy. The data released today showed that CPI in Great Britain grew by 0.3% m/m (+4.0% y/y) in March.  Sterling sluggishly responded to this statistics – for over a year inflation in the UK has been considerably higher than the significant level of 2% to which the Bank of England adheres.

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