GBP: British Pound tends upward
At the Forex currency market the British Pound Sterling rate grows steadily on Thursday, keeping on the trend of the last three days, when calm external background enables to make purchases of interesting levels.
Forex forecast: MACD indicator for the pair GBP/USD has crossed the signal line from top to bottom and is moving down, giving a pair sell signal. Stochastic Oscillator is increasing in the neutral zone, giving a pair buy signal.
Forex recommendations: in case of breakdown at the level of 1.6320, the target of the purchases will be the levels of 1.6350 and 1.6370. If upward breakdown does not take place the pair will consolidate close to the current levels.
It became known yesterday that index of the service sector rose by 0.6% m/m against expectations of the growth by 0.5% m/m. In addition, as a result of the second reading, GDP in the UK rose by 0.5% on quarterly basis (+1.8% y/y) in QI, was left unrevised.
Representative of the MPC of the Bank of England Mr. Will noted that it would be reasonable to start rates increase now. He believes that the sooner they start tightening in the economy and monetary policy, the easier it will be to avoid surges in the rates in the future. He also stressed that weakness of the Pound which has been observed lately, had a beneficial effect on the economy of the country.
We would remind that at the regular meeting, the Bank of England has left interest rate unchanged at the level of 0.50% per annum and volume of assets purchase was kept unchanged - at the level of GBP200 billion. The situation in the British economy is still far from being stable.
Deloitte & Touche LLP believe that the Bank of England will not raise rates until 2013 – according to observers economic growth in the country is still poor, basic economic trend in the UK is also not too good, which encourages them to leave rates at the current level at least until the end of this year and throughout next year as well. Inflation in the country is twice as high as 2% projected by MPC. Deloitte & Touche LLP indicates that British GDP will amount to 1.5% in 2011, the same as next year; while inflation will reach 4.5% in 2011 and 1.8% in 2012.
However, the Bank of England think that interest rate will reach the level of 0.75% by the end of this year; while by Q4 2012 it will be 1.75%, i.e. the Bank have made provisions for one rise in interest in 2011 and four in 2012. Inflationary prospects were described as “uncertain” and Central Bank admits that CPI will reach the level of 5% this year. Although the Bank of England expects that CPI will be slightly above 1.9% in two years time.
No important statistics is scheduled for the release today; however, the data on the house prices from Nationwide will be made known on Friday, 27 May.
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