GBP: British Pound regains losses of two days

At the Forex currency market on Friday morning the British Pound Sterling rate tries to regain losses of two days, correlating with Euro/Dollar

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it has returned to the sideways trend and is not giving a clear signal. Stochastic Oscillator has come into the oversold zone and maintains a sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex:  in case of break down at the level of 1.6350, the pair will go to 1.6365 and 1.638. If upward breakdown does not take place, the pair will aim to 1.6245.

Yesterday, MPC member, former “hawk” of the Bank of England noted that regulator will take measure when British economy will need help. According to him neither the forecast of the bank of England nor recent dynamics of the market can be the reason to continue quantitative easing policy, as economic situation is very different from that of 2008.

It seems that Wil has radically changed his view on British economy, joining the camp of “Doves” led by King in August.

We would remind that 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.

As it became known earlier net volume of borrowing in the public sector of Great Britain was at the level of -stg1.961 billion in July against the value of stg1.350 billion in June. In addition, other indices also showed that volumes of various public borrowings also went down, indicating fairly high level of effectiveness of the current economic programs.

According to the data released yesterday, British consumers continue to lose confidence in the economy. As per Nationwide estimates, assessment indicator of the current economic conditions in July remained at the low levels, reducing to 49 points against the previous 51 points. Thus, the growth of the indicator in May was temporary   and was provoked by the royal wedding and since that time it is successively going down.

It is worth noting that inflation in the UK remains unchanged on monthly basis in July (+4.4% y/y) against growth of 4.2% y/y in June.

House prices in Great Britain reduced by 2.1% m/m (-0.3% y/y) in August, according to Rightmove estimates; index of retail prices in the country fell by 0.2% m/m (+5.0% y/y), as per RPI estimates; while in June the indicator was at the same level of +5.0% y/y. 

Unemployment rate in the UK was at the level of 4.9% in July. At the same time, level of unemployed increased by 37.1 thousand. CPI in the UK fell by 0.1% m/m (4.2% y/y) In June against the forecast of growth by 0.2% m/m. Earlier Confederation of British Industry- CBI has reduced GDP forecast for the current year to 1.3% against the forecast of 1.7% in May. According to experts, sovereign crisis in Europe, debt problems in the U.S. and Japanese disasters will not enable British economy to strengthen considerably.

 

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