GBP: British Pound sluggishly declines

At the Forex currency market the British Pound Sterling rate still remains under the pressure on Wednesday; however sales are rather nominal at the moment.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, however it goes down, trading volumes are falling as well, which gives a sell signal. Stochastic Oscillator has come out of the oversold zone, going up in the neutral area and is giving a pair buy signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6370 the pair will go to 1.6395 and 1.6420. If the level of 1.6340 is exceeded, the level of 1.6300 will become the target for the sales.

The market will await the data on the UK trade balance indicator for March today. The indicator showed decrease in deficit from December 2010 until February this year, therefore if this trend continues, the Pound will gain strong support.

As statistics released yesterday showed, retail sales in the UK rose to the five-year highs in April, favoured by the warm weather last month and a royal wedding. According to the BRC estimates, the volume of comparable sales rose by 5.2% y/y after the decline by 3.5% y/y in March.

General Director of the Confederation of British Industry (CBI) Mr. Cridland believes that Finance Minister of the UK Mr. Osborne does not need to glance back at the lack of growth of the British economy during implementation of measures to reduce government spending considerably. “We continue to expect that recovery will proceed this year as well as the next year, however recovery pace will be slow, - thinks CBI. At the same time CBI expects that the growth in the British economy will be by 1.7% this year; and by 2.2% in 2012. Reduction in the government spending will help decrease GDP by another 0.75% in average

We would remind that at the regular meeting the Bank of England left interest rate unchanged at the level of 0.50% per annum, volume of assets purchase was also kept  unchanged- at the level of stg200 billion. Comments of the regulator did not contain any new development, and it seems natural; the situation in the British economy is far from being stable

Deloitte & Touche LLP believes that the Bank of England will not raise rates until 2013 – according to observers, economic growth in the country is still poor, basic economic trend in the UK is also not too good, which encourages to leave rates at the current level at least until the end of this year and throughout the next year as well. Inflation in the country is twice as high as 2% projected by MPC. Deloitte & Touche LLP indicates that British GDP will amount to 1.5% in 2011, the same as next year; while inflation will reach 4.5% in 2011 and 1.8% in 2012.

 
 

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