GBP: Growth of British Pound on Monday is not more than correction
At the Forex currency market the British Pound Sterling rate is traded upward on Monday as part of correction after sales last week.
Forex forecast: MACD indicator for the pair GBP/USD has broken through the signal line from top to bottom and is traded in the negative area, giving a sell signal. Stochastic Oscillator remains in the oversold zone, maintaining a similar signal.
Forex recommendations: in case of break down at the level of 1.5490, target for buying will be the levels of 1.5500 and 1.5520 as part of correction. If favourable environment does not last long, the Pound will revert to the sales at around 1.5450.
According to representative of the Bank of England Mr. Weale, economy of the country will not achieve pre-crisis levels until Q3 2013, and growth of capital will support consumption. He believes that monetary policy alone cannot fix up economy and there is a high possibility that QE will be launched if the state of economy will not improve after the first round of stimulation.
Weale also emphasized that there are signs of new recession.
Representative of the Bank of England, a former “Hawk” noted that inflation rate will drop sharply next year; however the Bank of England will continue to stimulate economy. It is interesting that all monetary politicians are confident that CPI will fall sharply, however no one specified what factors would trigger these radical changes in the situation. “Independent” informed last Friday that British Budget Committee intends to lower the forecast on labour market because a number of jobs in the private sector is going to be less than expected.
Earlier this week, British Prime Minister Cameron noted that European panic was the reason for paralyses in the market. In the current situation recovery pace in Great Britain is too slow. The country has to resolve the issue of its own debts and not to look around at others. Presently, additional stimulation could be dangerous; therefore it has not been seriously considered. However, if Eurozone resolved its urgent problems, it would become a powerful catalyst for the British economy.
According to observers from NABE, unemployment rate in the UK will be around 8.7% in 2012 against previous forecast of 8.5%; there is a chance that employment will increase up to 100 thousand in Q4 this year. It is expected that policy of the Bank of England will continue to be soft next year and GDP will amount to 2.2% in Q1 next year against predicted level of 2.5% in Q4 this year.
