GBP: British Pound remains in the five-day range

At the Forex currency market the British Pound Sterling rate goes down on Wednesday morning, remaining in the range of 1.6005-1.6178.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, and is going up slightly, giving a buy signal; however volumes are decreasing. Stochastic Oscillator started reversal from the overbought zone, shaping a sell signal.

Forex recommendations: off the market.Feasible event scenario at Forex: in case of break down at the level of 1.6110, the pair will go to 1.6130 and 1.61601.

If upward breakdown does not take place, the pair will aim at 1.6080.Economic situation in the UK has not changed significantly this morning. The minutes of the last meeting of the bank of England will be made public today, it is expected to be unfavourable, it is also possible that the document will disclose problematic issues of the British economy.

According to the forecast made by NIESR, GDP in Great Britain will rise by 0.1% in June against the revised level of 0.5% in May. It is logical, because economic situation in the UK remains tense. Comparable sales index BRC in Great Britain reduced by 0.6% in June against the slump by 2.1% y/y in May.Moody’s believe that the UK DGP will rise by 1.6% this year; in 2012 – by 2.1%; while the growth in 2010 had been by 1.3%. At the same time unemployment rate will vary in the range of 7.8-8.0%.

The forecast of the agency is based on the belief that the Bank of England will raise interest rate by 25 basis points before the end of this year and by another 1% -over the next year. Last Friday Citigroup reported a change in the rate forecast of the UK, shifting expectations of growth rate into Q2 2012 from Q4 2011 earlier.As it became known earlier, CPI in Great Britain fell by 0.1% m/m (4.2% y/y) in June versus the forecast of growth by 0.2% m/m. In addition, overall trade balance in the UK amounted to -stg4.06 billion in May against the forecast of stg2.700 billion.

It seems that the rise of imports in May triggered the growth of deficit in trade balance of the country. According to the data released earlier, unemployment rate in the UK amounted to 7.7% in March-May, level of unemployed reduced by 26 thousand within the same period. The level of unemployed rose by 24 thousand in June, while unemployment rate amounted to 4.7%. Average weekly earnings in Great Britain rose by 2.3% including bonuses in May against the growth of 2% in April.Thus, situation in the labor market remains tense, largely due to the austerity measures of the government.

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