GBP: British Pound Sterling is traded with minimal deviation on Friday

At the Forex currency market the British Pound Sterling rate is traded slightly downward on Friday, as external background remain uncertain although there has not been any additional negative news in the market.

Forex forecast: MACD indicator for the pair GBP/USD is growing in the negative area, shaping a buy signal. Stochastic Oscillator is going down in the neutral zone, giving a sell signal.

Forex recommendations: in case of break down at the level of 1.6035, target for the sale will be the levels of 1.6020 and 1.6000. If downward breakdown does not take place, the pair will stay at the current levels.

Macro-economic situation in Great Britain has not changed much.

Representative of the Bank of England Mr. Bean said earlier that growth rate of the British economy is slowing down in the second half of the year and he believes that real spending of the households will fall even more? significantly in the second half of the year.

Member of MPC Mr. Dale noted earlier that he also expects sharp decline in CPI at the beginning of 2012. According to Mr. Will, a representative of the Bank of England and MPC, British economy demonstrates slow growth rate and a chance of recession in Q4 would not be a great surprise.

Debates about monetary policy are still going on in the UK. Thus, Mr. Bean noted last week, that, as the result of QE program, the level of inflation can rise by 0.5%; however positive effect of the incentive program is that GDP will get additional +0.5%.

It became known earlier that consumer confidence index Gfk in the UK fell to -32 points in October against the forecast of -30 points. Thus, the level of confidence of British consumers fell to 32-month low. As it became known earlier retail price index BRC in the UK rose by 0.2% m/m (+2.7% y/y) in September. Volume of retail sales BRC in the UK increased by 0.3 y/y in September. Thus, according to the survey of the British Consortium of Retailers volume of retail sales rose slightly on annual basis last month; however monthly dynamics is mixed. Prices for food continued to grow, demand for clothes and footwear has dropped despite the seasonality. Therefore, basic demand is minimal at the moment. As it became known earlier, volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August.

Meanwhile, King expects sharp decline in inflation in 2012. CPI in the UK rose by 0.6% m/m (+5.2% y/y) in September against the growth of 4.5% y/y in August. Obviously, inflationary pressure has soared upward, which creates new impediments to economy. We would remind that at the meeting in October the Bank of England decided to leave interest rate unchanged at the level of 0.50% per annum, at the same time, they increased volume of asset redemption program. Therefore, QE was increased to 275 billion pounds against the previous level of 200 billion pounds. In the follow-up comments the head of the Bank of England Mervin King said that the expansion of the asset redemption program has been provoked by the slow growth of the global economy, however QE will have a positive impact on the British economy in the future. According to him these measures are preventive since Britain is in the middle of the serious crisis now. As it became known earlier, preliminary GDP in the UK rose by 0.5% q/q (+0.5% y/y) in Q3. In addition, volume of industrial output increased by 0.5% q/q (-0.7% y/y) in Q3. Report on GDP became a good surprise for investors; however a member of MPC Mr. Osborne immediately stressed that Britain has to undergo a long way to achieve stability.