GBP: British Pound remains under the pressure from bears

At the Forex currency market the British Pound Sterling rate continues to fall on Friday after yesterday’ collapse

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and it goes down, giving a pair sell signal. Stochastic Oscillator remains in the oversold zone on Friday, confirming a similar signal.

Forex recommendations: in case of breakdown at the level of 1.6040 traders’ targets will be the levels of 1.5980 and 1.5930.

As it became known yesterday, at the meeting yesterday the Bank of England decided to keep interest rate at the previous level of 0.50% per annum, the volume of debt redemption securities was also left unchanged – 200 billion pound sterling.

The Pound responded to the lack of allusions to the start of the monetary policy tightening with drastic decline. Objectively levels of inflation have been above the levels indicated by the regulator for over a year already, increasing pressure on the recovery of the British economy which is not too steady. Meanwhile interest rate is kept at the level of 0.5% per annum. The increase of VAT in the UK at the beginning of this year contributed to the growth of prices in British shops – the index rose to 24 month highs on annual basis in February. According to the estimates of BRC retailers’ prices rose by 2.7% y/y last month against the rise by 2.5% in January.

Thus, taking into account this factor as well, sooner or later the Bank of England will have to adopt measures aimed at reducing inflationary credibility.

Earlier, statistics on the UK industrial output in January was released – the index has grown at high speed over the last 16 years (+1.0% m/m , +6.8% y/y) while the growth by 0.8% m/m was expected. Statistics seemed especially favourable amid the decline of the index in December last year. 

It became known earlier that according to the data from Royal Institute of Chartered Surveyors, house prices in the UK are becoming stable; prices balance increased to -26% in February against the previous value of -31%. At the same time prices balance still remains in the negative area, while house prices are at the highs of the summer last year.

 

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