GBP: New week started with correction for the British Pound

 At the Forex currency market the British Pound Sterling rate is traded slightly upward at the Forex currency market on Monday morning taking advantage of the relatively tranquil external background and regaining from sales at the end of last week.

Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area and maintains outset movement, not giving any signals. Stochastic Oscillator goes down in the neutral zone and is shaping a sell signal.

Forex recommendations: in case of break down at the level of 1.6465, the pair will go to 1.6425 and 1.6400.

If downward breakdown does not take place, the pair will consolidate close to the current levels. It became known last Friday that 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.British Ministry of Finance said commenting statistics that tax revenues continue to increase despite poor state of the banks.It became known earlier that 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. CPI in the UK fell by 0.1% m/m (4.2% y/y) In June against the forecast of growth by 0.2% m/m. Earlier Confederation of British Industry- CBI has reduced GDP forecast for the current year to 1.3% against the forecast of 1.7% in May. According to experts, sovereign crisis in Europe, debt problems in the U.S. and Japanese disasters will not enable British economy to strengthen considerably.

Meanwhile, 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 required.It also became known this week 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. In addition, house prices in the UK reduced by 2.1% m/m (-0.3% y/y) in August, as per Rightmove estimates.

According to RPI estimates, index of retail prices in the country fell by 0.2% m/m (+5.0% y/y) in July; while in June the indicator had demonstrated the same level of +5.0% y/y.Publication of the minutes of the last meeting of the Bank of England became a significant event of last week and took players by surprise: all 8 members of MPC voted to keep the rate unchanged. It means that balance of power between “doves” and “hawks” has changed significantly.

Wil and Dale who had been previously set belligerently, have joined the camp of conservatives. Posen voted for the increase in the volume of securities repurchase from market for stg500 billion. He also noted in the follow-up comments that interest rate policy will entirely depend on the recovery of world economy and the economy of Eurozone.

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