GBP: British Pound continues to grow slowly

At the Forex currency market on Monday morning the British Pound Sterling rate continues to demonstrate intention to grow, however currency does not have enough catalysts to steady growth.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and after breaking through the signal line from top to bottom earlier, it indicates a sell signal. Stochastic Oscillator has reversed in the neutral zone, pushing away from oversold zone and started to slide down.

Forex recommendations: in case of breakdown at the level of 1.6080, the target for the purchase will be the levels of 1.6100 and 1.6130.

If upward breakdown does not take place, the pair will consolidate close to the current levels.It became known last Friday that British manufacturing industry has slowed down its growth; as per CIPS/Markit estimates PMI index amounted to 51.3 points in June against the revised level of 52.0 points in May.

The data released earlier showed that volume of production in the service sector of Great Britain declined by 1.2% m/m (+0.8% y/y) in April. Net mortgage lending totaled to Stg1.098 billion in May versus stg1.047 billion in April.

Final GDP in the UK (third reading) increased by 0.5% on quarterly basis (+1.6% y/y) which agreed with the forecast. At the same time level of consumer spending fell by 0.6% on quarterly basis (-0.5% y/y) in Q1. The minutes of the last meeting of the Bank of England was made public earlier. It is clear now that only two aggressive monetary politicians have been left, they are: Wheal and Dale.

A new member of the MPC, Broadbent who substituted a “hawk” Sentence, joined conservative camp. As a result, 7 votes were against the rise in the interest rate and two for it. The Pound responded with a sharp decline.Representative of the Bank of England Mr. Fisher said yesterday that British Financial markets are under threat of significant risks and one of the risk factor at the moment could be stress tests in the event if their results will become a surprise for the markets.

Eurozone continues to hamper the UK: Fisher stressed that the sovereign debt crisis in Eurozone and general uncertainty of the macro-economic outlook threaten recovery of the financial market. Statistics released this week showed that consumer confidence Gfk in Great Britain fell to -25 points in June against the level of -21 points in May. After the record growth in April, the indicator is falling, showing that the royal wedding had been the only factor of growth in the past. Reduction of the indicator, which fell to the lows of 2010, has been observed in all five components.

“What really causes frustration of the government is the scale of reduction, which has nullified half of the increase of last month, so that consumer confidence reached the lowest level of the whole last year”, noted in the accompanying commentary GfK NOP. Meeting of the Bank of England will be held this week, where decision on the interest rate will be made. 

 

[More]