GBP: British Pound experienced a sharp selloff again

At the Forex currency market the British Pound Sterling is trading downward again. For the last three days GBP stays within the trading range 1.5935-1.6043, a breakthrough which will indicate further dynamics for the pair.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to decline, giving a pair sell signal. Stochastic Oscillator is in the oversold zone, giving a pair the similar signal.

Forex recommendations: in case of bullish sentiment strengthening buyers’ targets for today will be the levels of 1.5990 and 1.5960.

Chancellor of the Exchequer George Osborne sees two main risks for the British economy: inflation and eurozone economic crisis. According to his speech, one of the factors of faster inflation is weak Pound. However currency weakness is supportive for the economic balance – so the descending rate of GBP is rather advantageous for the British economy.

Both fundamentals and the general external background continue to put pressure on the British Pound. The day before Spencer Dale of Bank of England said he would be ready to reverse his decision on the key interest rate in case the inflationary pressure in the country continued to ease. He voted to raise the key rate this month guided by the inflation indicators.

According to the Minutes of meeting of the Bank of England 6 members of MPC voted for keeping interest rate at the previous level. In addition, 8 people were for preserving current volume of the assets redemption program. Posen voted for the growth of QE by 50 billion pounds. Therefore, balance of forces in the Monetary Committee has remained unchanged, which frustrated bulls who expected indications of imbalance. Following the meeting of the Bank of England it became known that interest rate was kept at the previous level of 0.50% per annum, volume of debt securities was also left unchanged – 200 billion pound sterling.

Still medium trend for GBP/USD is bearish with the possibility of technical correction.
Note that in spite of strong 4q GDP data released the day before there is still no fundamental support for the pair.

 

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