GBP: British Pound is still weak

At the Forex currency market the British Pound Sterling continues to weaken on Thursday, as there are no catalyst to regain losses of this week at least partially.

Forex forecast: MACD indicator for the pair GBP/USD continues to go down in the negative area, giving a sell signal; volumes are increasing. Stochastic Oscillator remains in the oversold zone and is giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5720, the target for sale will become the levels of 1.5700 and 1.5680. If downward breakdown does not take place, the pair will consolidate at the current levels.

The data released in the middle of the week showed that as per MOT estimates, unemployment rate in the UK remained at the previous level of 7.9% in July. In addition, the level of unemployed increased by 80 thousand for the reporting period. Official statistics demonstrates that unemployment rate in the UK remained at the level of 4.9% in August and level of unemployed increased by 20.3 thousand.

The data released earlier was interesting: index of retail sales in the UK amounted to +0.6% m/m (+5.2% y/y), which agreed with expectations. In addition, consumer price index CPI rose by 0.6% m/m (+4.5% y/y) in August against the forecast of growth by 0.6% m/m. Inflation was fueled by the rising prices for textiles and clothes. Thus, inflationary pressure on the British economy still persists and is not going to retreat.

Preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2. The head of the Bank of England Mr. King noted this week commenting inflationary indices that, CPI can easily reach 5% and MPC can use interest rate or QE to control risks, if the need be.

It became known earlier that balance of house price RICS in the UK amounted to -23% in August which agreed with the forecast.

It seems that Great Britain will continue to reform the banking sector, with the main objective of protecting investors and consumers from the consequences of financial crisis.