GBP: British Pound continues to grow amid USD weakness

 At the Forex currency market the British Pound Sterling rate continues its growth, based on the USD weakness, because the Pound does not have its own incentives to rise.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, and is going up, giving a buy signal and approaching the intersection with the signal line. Stochastic Oscillator remains in the overbought zone, maintaining a buy signal.

Forex recommendations: in case of break down at the level of 1.6440, the pair will go to ? 1.6455 and   1.6470.

If upward breakdown does not take place the pair will consolidate at the current levels. Monetary politician Osborne is confident that Great Britain remains a quiet habour, because national authorities are taking tough measures on fiscal policy. He believes that the country shall continue to adhere to consolidation plan to get rid of debts; meanwhile the Britain is able to keep away from recession.

Rejection from the fiscal plan at the moment will become a real threat to economic growth, thinks Osborne.  It became known yesterday that preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2.Moody’s believe that the UK DGP will rise by 1.6% this year; in 2012 – by 2.1%; while the growth in 2010 had been by 1.3%. At the same time unemployment rate will vary in the range of 7.8-8.0%.

The forecast of the agency is based on the belief that the Bank of England will raise interest rate by 25 basis points before the end of this year and by another 1% -over the next year.The report which was made public last week showed that CPI in Great Britain fell by 0.1% m/m (4.2% y/y) in June versus the forecast of growth by 0.2% m/m. In addition, overall trade balance in the UK amounted to -stg4.06 billion in May against the forecast of stg2.700 billion. It seems that the rise of imports in May triggered the growth of deficit in trade balance of the country.

According to the data released earlier, unemployment rate in the UK amounted to 7.7% in March-May, level of unemployed reduced by 26 thousand within the same period. The level of unemployed rose by 24 thousand in June, while unemployment rate amounted to 4.7%. The minutes of meeting of the Bank of England, which were made public earlier indicates that MPC ranks are still suffering from the split:  Will and Dale continue to vote for the rate increase by 25 basis points.

In general, most members of the Monetary Committee believes it is very unlikely that tightening of the monetary policy can take place in the short term, moreover, there is an opinion that most likely economic weakness will last longer than expected.

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