GBP: In regards to Pound: it is better to stay away from the market

At the Forex currency market situation for the Pound is still confusing: amid ambiguous external background and mixed UK statistics, the Pound successfully regained part of losses, however the situation for the pair GBP/USD still remains obscure.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it is still moving along the signal line, preventing from forming a clear signal. Stochastic Oscillator is still in the oversold zone today not giving a signal either.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5560 the pair will go to 1.5650 and 1.5690. If the level of 1.5510 is exceeded, traders’ targets will be the levels of 1.5470 and 1.5430.

The UK statistics released on Thursday was generally good; however its interpretation by the economists is not too cheerful: retail sales increased by 0.3% m/m (+1.1% y/y) in November which is a positive indication. Although this piece of news has not changed very much the whole picture in Great Britain.

We would remind that according to the statistics, released earlier, inflation in the UK increased by 0.4% (+3.3% y/y) in November against the growth by 3.2% y/y in October. The fact, that the rate has been growing for the ninth consecutive month made economists worried. It is possible that the Bank of England will have to raise interest rate earlier to demonstrate that the inflation is under control. Interest rate is at the level of 0.50% per annum currently, the decision to leave it unchanged was made a week ago.

The UK unemployment rate in QIII increased to 7.9% against the previous level of 7.8% and the forecast of 7.7%. Number of unemployed reduced in Great Britain only by 1.2 thousand in November against expected reduction by 3 thousand.

Nevertheless, level of average wages in the UK rose by 2.2% against the level of 2.1% in September. Thus, statistics clearly showed that companies have been slow in hiring new employees; as long as British economic outlooks are obscure and authorities continue to implement full scale reduction of budget expenses. 

It is interesting that to date 52% of respondents expect that the Bank of England will raise interest rate over the next 12 months: in August the index amounted to 48.5%  
 

[More]