GBP: British Pound Sterling will determine movement direction at the end of the week

At the Forex currency market the British Pound Sterling rate is traded downward on Friday , continuing to follow general market sentiments.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD however it still directed upward which gives grounds for a pair buy signal. Stochastic Oscillator has not identified a signal at the end of the week, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5790 the pair will go to 1.5840 and 1.5870. If there is a breakdown at the level of 1.5730, traders’ targets will be the levels of 1.5680 and 1.5650. For the time being the pair GBP/USD goes down under the pressure from external background, however it is possible that the Pound will start to reverse.

Several major British monetary politicians expressed their attitude to the current state of economy and outlined their vision of the future. The head of the Bank of England Mervyn King stressed that authorities do not take compulsory measures to decrease the rate of the Pound and they are interested in the steady economic recovery. He also stressed that export levels in the country began to rise and there is no need to revise inflation in the country yet.

Representative of MPC Mr. Sentence said again that it is necessary to raise interest rates because next year the regulator will have to combat inflation growth. Sentence had already explained earlier this week that preservation of the interest rate at the low level for a long time undermines economy and weakens it.  At the same time fiscal discipline of the banks also becomes weaker. Sentence supports the rate increase and he is convinced that the country’s economy will withstand such step of the monetary authorities. As a solid argument the politician offered the value of inflationary levels which will remain above the target level of the regulator for the next two years, if the rate is not increased.  

Sentence’s opinion contradicts to the view of the representative of the Bank of England Mr. Posen, who noted earlier that he has not changed his opinion regarding the necessity of monetary policy easing in Great Britain. He stressed that his growth forecast in the country is well below forecasts of other members of MPC, as reduction of budget expenditures will inevitably cause reduction in the household consumption.

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