GBP: British Pound is still on sale
At the Forex currency market the British Pound Sterling rate continues to be in focus of the traders on Monday as investors keep on moving away from risk due to the unfavorable external background.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and goes down, volumes have also dropped, which gives a clear sell signal. Stochastic Oscillator has come into oversold zone, giving a similar signal.
Forex recommendations: in case of breakdown at the level of 1.6150, the pair will go to 1.6130 and 1.6100. If downward breakdown does not take place, the pair will consolidate close to the current levels.
It became known today, that house prices Rightmove in the UK rose by 1.3% m/m (+0.7% y/y) in May.The Pound has ignored this statistics so far.
We would remind that at the regular meeting, the Bank of England has left interest rate unchanged at the level of 0.50% per annum, volume of assets purchase was also kept unchanged- at the level of stg200 billion. The situation in the British economy is far from being stable.
However, the Bank of England believes that by the end of this year interest rate will reach the level of 0.75%, while in QIV, 2012 it will be 1.75%, i.e. the Bank has made provisions for one fact of the rise in the indicator in 2011 and four in 2012. Inflationary prospects were described as “uncertain” and Central Bank admits that CPI will reach the level of 5% this year. Although the Bank of England expects that CPI will grow slightly above 1.9% in two years time.
Deloitte & Touche LLP believes that the Bank of England will not raise rates until 2013 – according to observers, economic growth in the country is still poor, basic economic trend in the UK is also not too good, which encourages to leave rates at the current level at least until the end of this year and throughout the next year as well. Inflation in the country is twice as high as 2% projected by MPC. Deloitte & Touche LLP indicates that British GDP will amount to 1.5% in 2011, the same as next year; while inflation will reach 4.5% in 2011 and 1.8% in 2012.
General Director of the Confederation of British Industry (CBI) Mr. Cridland believes that Finance Minister of the UK Mr. Osborne does not need to glance back at the lack of growth of the British economy during implementation of measures to reduce government spending. “We continue to expect that recovery will proceed this year as well as the next year, however recovery pace will be slow, - thinks CBI. CBI expects that the British economy will grow by 1.7% this year; and by 2.2% in 2012. Reduction in the government spending will help decrease GDP by another 0.75% on average.
