GBP: British Pound stays put in advance of the meeting of the Bank of England

At the Forex currency market the British Pound Sterling rate almost stays put on Thursday morning in advance of the meeting of the Bank of England, which will be held today.

Forex forecast: MACD indicator for the pair GBP/USD has crossed the signal line from bottom to top, started to increase, and is giving a pair buy signal. Stochastic Oscillator is moving along the signal line in the neutral zone, and is not giving a clear signal.

Forex recommendations: in case of breakdown at the level of1.6440, the target for purchase will be the levels of 1.6460 and 1.6485. If upward breakdown does not take place, the pair can consolidate close to the current levels.

Rating agency Moody's warned Great Britain yesterday that the country can lose its AAA rating due to the inefficient fiscal policy.
The meeting of the Bank of England will be held today, which is unlikely to bring surprises and the rate will be left at the previous level. 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. 

Deloitte & Touche LLP believe 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 them to leave rates at the current level at least until the end of this year and throughout 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.

It became known yesterday that retail price index BRC in Great Britain rose by 2.3% y/y in May against the growth of 2.5% y/y in April. Slowdown in the retail price growth is not a good sign.

 
 

[More]