GBP: British Pound has lost growing momentum

At the Forex currency market the British Pound Sterling rate is traded with minimal deviation on Thursday.                                      

Forex forecast: MACD indicator for the pair GBP/USD has broken through the signal line from top to bottom and is traded in the negative area, giving a sell signal. Stochastic oscillator continues to go up in the neutral zone and has reached the border of the overbought zone already, giving a buy signal.

Forex recommendations: in case of breakdown at the level of 1.5700 the target for the buying will be the levels of 1.5720 and 1.5740. If sellers are back for the pair, the Pound can move to 1.5645.

Yesterday’s rapid growth of the Pound was based on the decision of the U.S. Federal reserve together with the world’s Central banks (including the Bank of England) to lower swop rates by 50 basis points. External background is not so clear today, as illustrated by the trading pair GBP/USD.

According to observers from NABE, unemployment rate in the UK will be around 8.7% in 2012 against previous forecast of 8.5%; there is a chance that employment will increase up to 100 thousand in Q4 this year. It is expected that policy of the Bank of England will continue to be soft next year and GDP will amount to 2.2% in Q1 next year against predicted level of 2.5% in Q4 this year.

Representative of the Bank of England Mr. Weale believes that economy of the country will not reach pre-crisis levels until Q3 2013, and growth of capital will support consumption. He believes that monetary policy alone cannot fix up economy and there is a high possibility that QE will be launched if the state of economy does not improve after the first round of stimulation. Weale also indicated that there are signs of new recession.

The head of the Bank of England Mr. King said earlier that inflation will go down considerably, as slow growth of wages and spare capacity of the economy are currently making progress in this direction. In the next 6 months however, drastic changes cannot be expected: CPI will remain in the channel of the existing rates. This is the first time in the last few months when supposition about reduction of the inflation level has been made.  Representative of the Bank of England, a former “Hawk”, Mr. Dale noted that inflation rate would drop sharply next year; meanwhile the Bank of England would continue to stimulate economy.