GBP: Pound Sterling tries to resist selling, determining movement direction

At the Forex currency market the British Pound Sterling rate is traded slightly upward on Monday morning; however instability of the external background has left its mark on the trading session.

Forex forecast: MACD indicator is in the negative area for the pair GBP/USD and it goes down, confirming a previous sell signal. Stochastic Oscillator is giving an antipodal signal today, being in the oversold zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5630, the pair will go to 1.5650 and 1.5690. If the level of 1.5560 is exceeded, traders’ targets will be the levels of 1.5520 and 1.5470.

It became known today that the UK houses prices as per Hometrack, reduced by 0.8% on monthly basis (-1.1% y/y). The situation in the sector continues to be ambiguous. Earlier the LSL/Acadametrics estimations showed that houses prices in England and Wales went up by 0.3% in October, the rise is going on for the sixth consecutive month, increasing by 6.1% on annual basis; analytics in the real estate sector contradict one another: Halifax stated that houses prices in October increased by 1.8%, Nationwide insisted that the indicator fell by 0.7%.  Nationwide economists stressed earlier that if the trend which had started in the early summer would continue in November and December, the prices would have a chance to drop by 1% by the end of the year. Rightmove clarified that they noticed the oddity in indicators in October; however they assumed that traders deliberately start overprice to hold the objects until better time.

Earlier several major British monetary politicians expressed their attitude to the current state of economy and outlined their vision of the future. The head of the Bank of England Mervin King stressed that authorities do not take compulsory measures to decrease the rate of the Pound and they are interested in the steady economic recovery. He also stressed that export levels in the country began to rise and there is no need to revise inflation in the country yet.

Representative of MPC Mr. Sentence said again that it is necessary to raise interest rates because next year the regulator will have to combat inflation growth. Sentence had already explained earlier this week that preservation of the interest rate at the low level for a long time undermines economy and weakens it.  At the same time fiscal discipline of the banks also becomes weaker. Sentence supports the rate increase and he is convinced that the country’s economy will withstand such step of the monetary authorities. As a solid argument the politician offered the value of inflationary levels which will remain above the target level of the regulator for the next two years, if the rate is not increased.  

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