GBP: British Pound Sterling continues to be corrected

At the Forex currency market technical correction which started yesterday continues for the British Pound Sterling rate on Tuesday.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to go up, confirming a previous buy signal for the pair. Stochastic Oscillator is not giving a clear signal today, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6060 the pair will go to 1.6100 and 1.6150. If the level of 1.5950 is broken down, traders’ targets will be the levels of 1.5890 and 1.5850/40.

The day is going to be eventful in regard to the UK economic information: in the afternoon (12.30 Moscow time statistics on GDP in QIV, preliminary data, is expected to be released, as well as data on the volume of net public sector borrowings in December). In addition, the head of the bank of England Mervyn King will deliver a speech tonight. 

It is interesting that according to Begbies Traynor, British companies again experience complications in doing business due to the reduction of government spending in the country. Thus, about 140 thousand companies in the UK are now in difficulties, and crisis in the companies started long before active phase of reduction of government spending.

According to Begbies Traynor studies, this fact increases fears of the second wave of recession in the country. In addition, experts see signs of stagnation in British economy which is yet another alarm bell.

Last Friday, representative of the Monetary Committee of the Bank of England Posen noted once again that the position of the regulator towards inflation has remained unchanged: The bank expects that inflationary pressure will reduce to the level of 2% soon and below, as fundamental factors, which take into account, for example, zero growth in base salary, give indications of this. We would remind that inflation in Great Britain amounted to 3.7% in December against the forecast of 3.4%. According to traders, it became evidence in favor of interest rate increase by the Bank of England. Market believes it is a settled matter because inflation has remained above target level of the regulator for 11 months. 

 

 

[More]