GBP: British Pound is ready to recover

At the Forex currency market the British Pound Sterling is traded briskly on Wednesday after correction earlier this week.

Forex forecast: MACD indicator for the pair GBP/USD started to grow moderately in the negative area, shaping a buy signal; however volumes are decreasing. Stochastic Oscillator goes down in the neutral zone and is giving a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5750 target for the purchase will become the levels of 1.5770 and 1.5800. However, if external negative factor intensifies, selling target will be the level of 1.5711.

Yesterday the head of the Bank of England Mr. King said that additional measures to stimulate British economy are fully justified currently and slowdown of economic pace was caused by global imbalance. According to him, decline in exports volumes is harmful for the British economy. In addition, European problems have a negative impact on the pace of development of British economy.

Statistics released on Tuesday was interesting: CPI in the UK rose by 0.6% m/m (+5.2% y/y) in September against the growth of 4.5% y/y in August. Obviously, inflationary pressure has soared upward, which affects economy. We would remind that in the outcome of the meeting in October, the Bank of England decided to leave interest rate unchanged at the level of 0.50% per annum, at the same time increasing volume of the assets repurchase program. Therefore, QE was increased to 275 billion pounds against the previous level of 200 billion pounds. In the follow-up comments the head of the Bank of England Mervin King said that the expansion of the assets repurchase program has been provoked by the slow growth of the global economy, however QE will have a positive impact on the British economy in the future. According to him these measures are preventive since Britain is in the middle of the drastic crisis now.

As it became known earlier retail price index BRC in the UK increased by 0.2% m/m (+2.7% y/y) in September. Volume of retail sales BRC in the UK increased by 0.3 y/y in September. Thus, according to the survey of the British Consortium of Retailers volume of retail sales rose slightly on annual basis last month; however monthly dynamics is mixed. Prices for food continued to grow, demand for clothes and footwear fell despite the seasonality. Therefore, basic demand is minimal at the moment. Volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August.

Statistics released this morning showed that house price index Rightmove in the UK rose by 2.8% m/m (+1.2% y/y) against preliminary expectations of grow by 0.7% m/m. The survey demonstrated that there is a huge gap between the house prices in the North and South, as in the Southern part of the country the price is still twice as high as in the North.