GBP: British Pound declines again

At the Forex currency market the British Pound Sterling declines again on Thursday after of technical rebound.

Forex forecast: MACD indicator for the pair GBP/USD has broken through the signal line from top to bottom and goes down in the negative zone, giving a sell signal. Stochastic Oscillator remains in the oversold zone and is giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5930, the target for sale will become the levels of 1.5910 and 1.5880.

A meeting of the Bank of England will be held today, where the rate is most likely will be left unchanged.

It is interesting that a hawk has showed up again in the horizon of the British financial field; Andrew Sentence, ex-member of MPC said in his interview with “The Times” that he continues to adhere to the view that the rise of the interest rate by 50 basis points is necessary for the country. He also finds arguable expectations of the Bank of England that inflation will move away from the level of 4.50% in the near future.

As the data released yesterday showed index of retail prices BRC in Great Britain increased by 0.1% m/m (+2.7% y/y) in August against the fall of 0.2% m/m a month earlier. However, annual gain amounted to 2.8% in July; obviously the CR continues to decrease. Expensive raw material puts pressure on consumer inflation, which is reflected in the indicator. According to Nielsen estimates about 40% of purchases were the goods involved in various promotions, which proves that the British do not want to spend money.

It also became known this week that retail sales BRC in the UK fell by 0.6% y/y in August. Low level of consumption in Great Britain, along with the low consumer confidence and poor state of the real estate market has become the main reasons of the decline in the index. Demand is obvious only for food, while demand for clothes and household goods goes down sharply,- reported British Retail Consortium.

According to the data released today consumer confidence index GFK/NOP in the UK fell to -31 points in August against the level of -30 points in July. This index, which is one of the most objective assessment    of consumer confidence in the UK, is now below the lows of 1970, the time of recession in the country Note: that this index indicates consumers’ economic expectations for the next 12 months.

Preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2. The head of the Bank of England Mr. King noted this week commenting inflationary indices that, CPI can easily reach 5% and MPC can use interest rate or QE to control risks, if the need be.