GBP: British Pound is being technically corrected

At the Forex currency market the British Pound Sterling rate is being technically corrected on Thursday after yesterday’s fall.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and is descending, confirming a pair sell signal. Stochastic Oscillator remains in the oversold zone today.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6120 the pair will go to 1.6180 and 1.6250. If the level of 1.5980 is broken down, traders’ targets will be new local lows at 1.5940 and 1.5900.

The UK Finance Minister Osborn said yesterday that the country will continue to adhere to the selected financial policy; however last data on the labor market indicates weak economic growth. He thinks that current indicators in the in the labor sector demonstrate economic imbalance. 

In order to relieve tension in economy it is necessary to resolve the issue of budget deficit as well.

The data released in the mid-week showed that unemployment rate ILO in the UK increased to 8.0% in November- January, while the forecast was 7.9%. At the same time level of unemployed ILO rose by 27 thousand on quarterly basis. 

Following the meeting of the Bank of England last week 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.

The Pound responded to the lack of allusions regarding the start time of the monetary policy tightening by drastic decline. Objectively levels of inflation have been above the levels indicated by the regulator for over a year already, increasing pressure on the recovery of the British economy which is not too steady. Meanwhile interest rate is kept at the level of 0.5% per annum. The increase of VAT in the UK at the beginning of this year contributed to the growth of prices in British shops – the index rose to 24 month highs on annual basis in February. According to the estimates of BRC retailers’ prices rose by 2.7% y/y last month against the rise by 2.5% in January.

In general the Pound tightly correlates with the position of the pair EUR/USD and reflects the dynamics of investors’ risk aversion.

 

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