GBP: British Pound soared due to aggressive comments

At the Forex currency market the British Pound Sterling rate grows steadily, continuing the rise, which started yesterday.

Forex forecast: MACD indicator for the pair GBP/USD is moving along the signal line in the positive area and is not giving a clear signal. Stochastic Oscillator goes up in the neutral zone and is shaping a buy signal.

Forex recommendations: in case of breakdown at the level of 1.6430, the target for sale will be the levels of 1.6450 and 1.6470. If upward breakdown does not take place, the pair will consolidate close to the current levels.

Representative of MRS, Mr Wheal, one of the remaining “hawks” in the Bank of England, stressed that the soonest rise in  the interest rate will reduce the need for its further raise, and it is necessary to increase the rate despite the fact that the level of inflation turned out to be below the forecast. According to him all conditions, required for the preventive actions of the Bank of England have been created, and the sooner the BoE launches tightening policy, the more flexibility it will give to the regulator in the future.

As reported in the publication of edition of “Independence”, the Bank of England must be prepared to save national economy from the threat of double dip recession, and according to the comments of BDO representative the regulator has to leave interest rate at the current level of 0.50% per annum and stop using it as a shield against inflation.

Last week the meeting of the Bank of England was held, where interest rate was left unchanged at the level of 0.50% per annum, volume of assets redemption was also kept unchanged, at the level of stg200 billion. The follow- up comments did not contain anything fundamentally new, as expected.

It is worth noting that Rating agency Moody's warned Great Britain earlier that the country can lose its AAA rating due to the inefficient fiscal policy.
The Bank of England believes that interest rate will reach the level of 0.75% by the end of this year; while by Q4 2012 it will be 1.75%, i.e. the Bank have made provisions for one rise in interest in 2011 and four in 2012. Inflationary prospects were described as “uncertain” and Central Bank admits that CPI will reach the level of 5% this year. Although the Bank of England expects that CPI will be slightly above 1.9% in two years time, Representative of the Bank of England Mr. Fisher noted earlier that bad state of economy could prompt the Central Bank to further policy easing. In addition, in case of unexpected economic downturn there is a chance that economic stimulation with the help of repurchasing of the securities from the market will continue.  

 

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