GBP: British Pound is still uncertain
At the Forex currency market the British Pound is still in the suspended situation on Thursday – the currency does not demonstrate any certain trend since the beginning of this week.
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to demonstrate growth, confirming a previous buy signal for the pair. Stochastic Oscillator has come into oversold zone, still giving a sell signal, and at the same time, creating conditions for the trend reversal.
Forex recommendations: off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.6150 the pair will go to 1.6200 and 1.6250. If the level of 1.6025 is exceeded, traders’ targets will become the levels of 1.6000 and 1.5960.
The data on the production volumes will be released today; at 15:00 Moscow time the Decision of the Bank of England on the interest rate will become known. Although market does not expect any surprises from the regulator, the GBP is going to have an uneasy day.
Statistics released yesterday was mostly positive: Index of retail prices BRC in January: +2.5% y/y against +2.1% y/y in December; GDP forecast for 2011: CBI: +1.8% against +2.0% for the previous period. Attention should be focused today on the comments of the Bank of England following the meeting- it will be interesting to know if the regulator has plans to increase interest rate over the next six months.
The situation in the British economy remained almost unchanged. We would remind that the study of the National Institute of Economic and Social Researches “NIESR” which was made public earlier agreed with the market sentiments. Thus, the Institute believes that the Bank of England can raise interest rate three times this year, while the main target will still remain the control of consumer prices growth.
NIESR expects that the rate will increase to the level of 1.75% against the current values by the end of 2011. At the same time it has also upgraded its inflation forecast to 3.8% for 2011 against the previous level of 2.8%. It is expected that unemployment rates will increase to 8.7% this year against the current level of 7.8%.
Earlier NIESR has already made forecasts, which were not too rosy. Thus, the Institute recommended the UK government to postpone for some time a program of budget expenses reduction, since the strategy can bring huge losses in economy, rather than benefit. The statement made by the UK Prime-Minister Cameron earlier partly proves that this year will be extremely difficult for the country’s economy. We would remind that as it became known on Friday consumer confidence in the UK fell to -29 in January, as per GFK/NOP, against the previous level of -21. Thus, the index is at its lowest level since 1994, which indicates consumers’ skepticism regarding prospects of the economy in the nearest future.
