GBP: British Pound is under pressure of negative factors
At the Forex currency market the British Pound Sterling rate started to go down again today under the pressure from investors’ withdrawal from risk at the global capital markets, caused by the aggravations in the Middle East
Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to go up, giving a pair buy signal. Stochastic Oscillator has come out of the oversold zone and started to form a buy signal as well.
Forex recommendations: considering current external background-off the market.
Feasible event scenario at Forex: in case of breakdown at the level of 1.6140 the pair will go to 1.6200 and 1.6250. If the level of 1.6025 is exceeded, traders’ targets will be the levels of 1.6000 and 1.5950.
The key event of the week took place for the Pound yesterday - the meeting of the Bank of England, which, however, did not bring any surprises, since the rate was left at the level of 0.5% per annum as well as the volume of assets redemption program (200 billion pounds).
However, market believes that the regulator will have to start monetary policy tightening due to the high levels of inflation. According to estimates of the British economist Roger Bootle, the Bank of England will announce the rise of the rate in May this year.
Statistics released yearlier 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 be raised 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%.
