GBP: British Pound started profit taking

At the Forex currency market the British Pound Sterling rate is being corrected on Friday morning after yesterday’s rise due to external positive factor.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD, and is going up, giving a buy signal. Stochastic Oscillator remains in the overbought zone, maintaining a buy signal.

Forex recommendations: in case of break down at the level of 1.6300, the pair will go to 1.6325 and 1.6250.

If upward breakdown does not take place the pair will consolidate at the current levels. The Pound might drop to 1.6240 because of profit taking.The Pound received the main share of the positive factors from external background; nevertheless internal statistics was also encouraging. Thus, retail sales increased by 0.7% m/m (0.4% y/y) in June against the forecast of reduction by 0.1% m/m. 

This was the fact that inspired players to start purchase.In addition, net volume of public borrowing PSNB amounted to 11.977 billion pounds in June against the forecast of 10.4 billion pounds.In other respect, economic situation in the UK has not changed much.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%. The minutes of meeting of the Bank of England, which were made public earlier indicates that MPC ranks are still suffering from the split:  Will and Dale continue to vote for the rate increase by 25 basis points.In general, most members of the Monetary Committee believes it is very unlikely that tightening of the monetary policy can take place in the short term, moreover, there is an opinion that most likely economic weakness will last longer than expected.

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. A week earlier, Citigroup reported a change in the rate forecast of the UK, shifting expectations of growth rate into Q2 2012 from Q4 2011 earlier.

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