GBP: British Pound is losing positions

At the Forex currency market the British Pound Sterling rate is going down on Thursday – investors are moving away from risks, amid new facts of slowing down in the global economy. In addition, a meeting of the Bank of England will be held today.

Forex forecast: MACD indicator for the pair GBP/USD, remains in the positive area, however it is moving along the signal line not giving a clear signal. Stochastic Oscillator is also moving along the signal line in the neutral zone, not giving a clear signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6340, the pair will go to 1.6310 and 1.6280. If downward breakdown does not take place, the pair will consolidate at the current levels.

A meeting of the Bank of England will be held today; where interest rate issue will be resolved, most likely it will be maintained at the previous level of 0.50%. Comments of the British regulator are not worth of expecting, the last few meeting were as similar as peas.

It became known yesterday that index of PMI CIPS in the UK construction sector increased to 53.6 points in July against the forecast of 53.0 points. In June, CPI in the UK fell by 0.1% m/m (4.2% y/y) against the forecast of growth by 0.2% m/m. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2. In addition, CPI in the UK fell by 0.1% m/m (4.2% y/y) in June against the forecast of growth by 0.2% m/m.

Earlier, Confederation of British Industry, CBI has reduced GDP forecast for the current year to 1.3% against the forecast of 1.7% in May. According to experts, sovereign crisis in Europe, debt problems in the U.S. and Japanese disasters will not enable British economy to strengthen considerably.

CBI also suggests that low levels of consumer confidence reduce companies’ ability to invest.

Moody’s believes that the UK DGP will rise by 1.6% this year; in 2012 – by 2.1%; while the growth in 2010 had been by 1.3%. At the same time unemployment rate will vary in the range of 7.8-8.0%. The forecast of the agency is based on the belief that the Bank of England will raise interest rate by 25 basis points before the end of this year and by another 1% -over the next year.

Finance Minister Osborne is confident that Great Britain continues to hold a status of a quiet habour, because national authorities are taking tough measures on fiscal policy. He believes that the country shall continue to adhere to consolidation plan to get rid of debts; meanwhile the Britain is able to keep away from recession. Rejection from the fiscal plan at the moment will become a real threat to economic growth, thinks Osborne. 

 

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