GBP: British Pound tends to sales again

At the Forex currency market the British Pound Sterling rate reverted to sales on Tuesday after brief rebound last night. Recall that earlier in the week the GBP had reached lows of February.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and after breaking through the signal line from top to bottom earlier, gives a sell signal. Stochastic Oscillator goes down after coming into the oversold zone and is giving a similar signal.

Forex recommendations: in case of breakdown at the level of 1.5940, sales target will be the levels of 1.5900 and 1.5880. If downward breakdown does not take place, the pair will consolidate close to the current levels.

Economic situation in Great Britain remains almost unchanged on Tuesday morning.Last week, British Prime Minister Cameron stressed that situation in the Eurozone impacts negatively on the country, and the UK should not be involved in helping Greece, as Eurozone is strong enough to prevent its own collapse.

The minutes of the last meeting of the Bank of England was made public earlier. It is clear now that only two aggressive monetary politicians have been left, they are: Wheal and Dale. A new member of the MPC, Broadbent who substituted a “hawk” Sentence, joined conservative camp. As a result, 7 votes were against the rise in the interest rate and two for it. The Pound responded with a sharp decline.

The head of the Bank of England, Mervyn King said earlier that he believes it is European crisis that is the main reason of the financial instability in the country. According to him, fiscal instability could spread through financial markets and it is not clear whether Britain will be able to withstand the crisis.Representative of the Bank of England Mr. Fisher said that at the moment British economic forecast is vague, since risks are incorporated both in inflation expectations and in weak growth as well.

According to him, it will be more difficult for the Central Bank to cope with deflation than inflation; however despite temporary inflation rise, MPC intends to achieve its medium term objectives. As for the interest rate, Fisher noted that the rise will be required, if wages begin to grow, however, it is not necessary to change monetary police now. The politician also touched upon the issue of the Pound value.

He believes that government should not influence on the rate of the Pound and that the currency looks fairly stable since 2009.  It became known yesterday that house prices in Great Britain fell by 0.1% m/m (-3.9% y/y) in June, as per Hometrack estimates. Houses in the UK continue to become cheaper and it is a negative signal for the economy, given the reluctance of the British to spend money. 

[More]