GBP: British Pound recovers from yesterday’s evening selloff

At the Forex currency market the British Pound Sterling rate tries to recover on Friday morning from a selloff seen yesterday’s evening.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to decline nearing the signal line aiming at crossing it top-down, maintaining a sell signal. Stochastic Oscillator is rising in the neutral zone, giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6080 the pair will go to 1.6100 and 1.6120. If the level of 1.6040 is exceeded, the pair will have a chance to test 1.6000.

Important macro-statistics was published the day before, according to which the level of GfK Consumer confidence in Great Britain remained at -28 points in March against the forecast of reduction to -29 points. Thus consumer confidence still doesn’t improve: the main restrictive factor in country’s budget. Apparently, market needs a positive driver.

As it became known this week, the level of 4q GDP in Great Britain was revised to -0.5% q/q (+1.5% y/y) against the forecast of revision to -0.6% q/q. The released data was strong, but the pair GBP/USD remained under pressure and didn’t respond to it.

Chancellor of the Exchequer George Osborne sees two main risks for the British economy: inflation and eurozone economic crisis. According to his speech, one of the factors of faster inflation is weak Pound. However currency weakness is supportive for the economic balance – so the descending rate of GBP is rather advantageous for the British economy.

According to the Minutes of meeting of the Bank of England 6 members of MPC voted for keeping interest rate at the previous level. In addition, 8 people were for preserving current volume of the assets redemption program. Posen voted for the growth of QE by 50 billion pounds. Therefore, balance of forces in the Monetary Committee has remained unchanged, which frustrated bulls who expected indications of imbalance. Following the meeting of the Bank of England it became known that interest rate was kept at the previous level of 0.50% per annum, volume of debt securities was also left unchanged – 200 billion pound sterling.

Still the situation with the British Pound remains tense, in mid-term we may see decline and consolidation in the range 1.5950-1.6050.

 

[More]