GBP: British Pound Sterling is on sale again, signals, however, are multidirectional

At the Forex currency market the British Pound Sterling rate is again in the center of traders’ attention on Tuesday despite some recovery yesterday. In general the situation for the pair GBP/USD still remains vague.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and continues to go up, giving a pair buy signal. Stochastic oscillator is giving a pair sell signal today.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5600 the pair will go to 1.5620 and 1.5640. If the level of 1.5540 is exceeded, traders’ targets will be the levels of 1.5510 and 1.5460.

It became known today that level of retail sales in the UK reduced by 0.3% y/y in December at the similar trading floors, as per BRC estimates while the forecast of growth had been by 0.7% y/y. At the same time sales rose by 0.4% y/y in October-December, while total sales: by 2.2% y/y.
According to the representatives of the British Chamber of Commerce sharp increase in demand for exports in the country would not be a sufficient factor to stop slowing down of British economy according to the results of QIV 2010 and QI of 1011. Thus, experts of the Chamber believe that although the rate of production is high, low productivity in the service sector still remains a weak spot of the UK economy.

In general this opinion agrees with the earlier forecast made by various agencies. It is possible that such trend will be continued in QII this year.
Ex-member of the Bank of England Mr. Blanchflower noted on Friday that possible raise of the interest rates by the Central bank can become a real nightmare for the UK Finance Minister Mr. Osborne in a new year. He stressed once more that rates should be kept at a low levels, as their rapid growth will strike a blow on the houses prices and consumption levels.

Osborn noted earlier, that all measures required to improve economic growth have been taken by the country, and budget edition in March will include both new and old steps to stimulate growth. British Finance Minister also stressed the need to continue reforms the country, as the plan of the deficit reduction can stimulate the growth of confidence in the economy.

CIPD, the UK Institute of Personnel Development believes that the situation in the employment sector can be complicated for UK economy in 2011, because unemployment rate can rise to 9% and employment can reduce to 200 thousand jobs. According to CIPD estimates reduction in the public sector will amount to about 120 thousand jobs and about 80 thousand in the private sector. We would remind that British Government plans to reduce the number of staff in public sector by 330 thousand by 2015.
 

[More]