GBP: British Pound still strives to soar up

At the Forex currency market the British Pound Sterling rate is being corrected slightly on Thursday morning which is natural after five days of growth and the leap to the local highs, which we witnessed yesterday.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area and started to go up, giving a buy signal. Stochastic Oscillator remains in the neutral zone, and is giving a buy signal; however, it tends to make reversal and go out of the zone.

Forex recommendations: in case of break down at the level of 1.6530, the pair will go to 1.6545 and 1.65601. If upward breakdown does not take place, the pair will consolidate close to the current levels and there is also a chance of correction to 1.6340.

It became known yesterday that unemployment rate in the UK was at the level of 4.9% in July. At the same time, level of unemployed increased by 37.1 thousand.

In addition, minutes of the last meeting of the Bank of England became known in the middle of the week, which took players by surprise: all 8 members of MPC voted to keep the rate unchanged. It means that balance of power between “doves” and “hawks” has changed significantly. Wil and Dale who had been previously set belligerently have joined the camp of conservatives. Posen voted for the increase in the volume of securities repurchase from market for stg500 billion.

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 head of the Bank of England Mr. King noted this week commenting inflationary indices that, CPI can easily reach 5% and MPC can use interest rate or QE to control risks, is required.

In addition, house prices in the UK fell by 2.1% m/m (-0.3% y/y) in August, as per Rightmove estimates.

It became known this week that inflation in the UK remains unchanged on monthly basis in July (+4.4% y/y) against growth of 4.2% y/y in June. Inflationary pressure is growing and for the fragile British economy it is not the best moment.

According to RPI estimates, index of retail prices in the country fell by 0.2% m/m (+5.0% y/y) in July; while in June the indicator had demonstrated the same level of +5.0% y/y.