GBP: British Pound Sterling is rising slightly after yesterday’s sales

At the Forex currency market the British Pound Sterling rate is making attempts to recover on Thursday morning after the surge of sales yesterday, when investors closed positions in fear that debt crisis could spread to the economy of France and do more harm to Great Britain. As a result, the Pound fell to the lows of July. 

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area it is moving along the signal line and is not giving a clear signal. Stochastic Oscillator goes down in the neutral zone, and is approaching oversold area, giving a sell signal.
Forex recommendations: in case of break down at the level of 1.6150, the pair will go to 1.6130 and 1.6100. If downward breakdown does not take place, the pair can be corrected up to 1.6210.
 
Yesterday the head of the Bank of England, Mervyn King stressed in his speech that current anxiety in the markets is the result of the irritable situation with the debts in the U.S and Eurozone. Regulator downgraded his forecast for the world economic growth and noted that outlooks for the growth in the British GDP are also decreasing.

According to him, downside risks dominate in the British economy now; in 2012 the country can only expect modest economic growth, because economic problems aggravate nearly every day. British economy has already faced downfall in the volume of lending and free financing and regulator does not rule out that the rate might be increased “one day”, however monetary policy shall remain flexible.
 
Prime Minister Cameron called for Parliament to cut short vocation in order to proceed to work this Thursday, mainly because of the escalating situation in the country. This is a precedent. Parliament had been summoned from vocation only twice in the last decade in 2001, when there was a terrorist attack in the U.S. and in 2002 when Britain joined military campaign against Iraq.
 
It also became known last week, that index of PMI CIPS in the UK construction sector increased to 53.6 points in July against the forecast of 53.0 points. In June, CPI in the UK fell by 0.1% m/m (4.2% y/y) against the forecast of growth by 0.2% m/m.

Earlier, Confederation of British Industry, CBI has reduced GDP forecast for the current year to 1.3% against the forecast of 1.7% in May. According to experts, sovereign crisis in Europe, debt problems in the U.S. and Japanese disasters will not enable British economy to strengthen considerably. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2.

The meeting of the Bank of England was as usual brief and concise: the rate was left at the level of 0.50% per annum, package of public bonds redemption was also left unchanged, in the amount of 200 billion pounds.

No special comments have been made: British regulator continues to adhere to the old monetary policy.
Rating agency S&P said yesterday that rating downgrade does not threaten Great Britain.