GBP: British Pound takes advantage of the weak dollar

At the Forex currency market on Friday morning the British Pound Sterling rate goes up on Monday morning, continuing to move in the channel which took shape on Friday night. The GBP has a chance to regain losses of the last week, while the weakness of the USD is still preserved. 

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area; it has returned to the sideways trend and is not giving a clear signal. Stochastic Oscillator has come out of the oversold zone and shaping a buy signal.

Forex recommendations: in case of break down at the level of 1.6395, the pair will go to 1.6420 and 1.6450.

The main driver for the GDP growth today is the continuing weakness of the USD caused by the outcome of the speech of the FR chairman Bernanke on Friday.

In other respects, economic situation of Great Britain remains unchanged this morning.

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, if the need be.

As it became known earlier net volume of borrowing in the public sector of Great Britain was at the level of -stg1.961 billion in July against the value of stg1.350 billion in June. In addition, other indices also showed that volumes of various public borrowings also went down, indicating fairly high level of effectiveness of the current economic programs.

According to the data released previously, British consumers continue to lose confidence in the economy. As per Nationwide estimates, assessment indicator of the current economic conditions in July remained at the low levels, reducing to 49 points against the previous 51 points. Thus, the growth of the indicator in May was temporary   and was provoked by the royal wedding and since that time it is successively going down. It is worth noting 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.

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. Earlier, MPC member, former “hawk” of the Bank of England Weale noted that regulator will take measure when British economy will need help. According to him neither the forecast of the Bank of England, nor recent dynamics of the market can be the reason to continue quantitative easing policy, as economic situation is very different from that of 2008.

It seems that Weale has radically changed his view on British economy, joining the camp of “Doves” led by King in August.

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