GBP: British Pound started this week with decline

At the Forex currency market the British Pound Sterling rate tends to decline on Monday morning; its opening level has been lower than final level on Friday.

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

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of break down at the level of 1.6100, the pair will go to 1.6080 and 1.6060. If downward breakdown does not take place, the pair will consolidate at the levels, achieved earlier.

On 20 July this week the minutes of the meeting of the Bank of England will be made public; in this respect it will be interesting to know balance of power in the Monetary Committee.

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.

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.

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.

The head of the Bank of England Mr. Mervyn King noted yesterday that in the next couple of years inflation in the country shall revert to the level of 2.0%. According to him, current monetary policy is quite logical and its aggressive tightening in the past and this year had been an unwise step. The meeting of the Bank of England was held last week: interest rate was kept unchanged at the level of 0.50% per annum. Statements on the monetary policy have not been made. It is likely that the rate will remain at the current level until Q1 2012.

 

 

[More]