GBP: Sales of British Pound is being corrected after significant sales

At the Forex currency market the British Pound Sterling is traded upward on Wednesday morning as part of technical rebound.

Forex forecast: MACD indicator for the pair GBP/USD has merged with the signal line, tending to break it through from top to bottom and is giving a sell signal. Stochastic Oscillator remains in the oversold zone and is giving a similar signal.

 Forex recommendations: in case of break down at the level of 1.5990, the target for sale will become the levels of 1.5970 and 1.5950.

According to the data released in the morning, retail price index BRC in the UK rose by 0.1% m/m (+2.7% y/y) n August against the fall of 0.2% m/m a month earlier. However, annual gain amounted to 2.8% in July; obviously the CR continues to decrease. Expensive raw material puts pressure on consumer inflation, which is reflected in the indicator. According to Nielsen estimates about 40% of purchases were the goods involved in various promotions, which proves that the British do not want to spend money.

It became known yesterday that retail sales BRC in the UK fell by 0.6% y/y in August. Low level of consumption in Great Britain, along with the low consumer confidence and poor state of the real estate market has become the main reasons of the decline in the index. Demand is obvious only for food, while demand for clothes and household goods goes down sharply,- reported British Retail Consortium.

According to the data released today consumer confidence index GFK/NOP in the UK fell to -31 points in August against the level of -30 points in July. This index, which is one of the most objective assessment    of consumer confidence in the UK, is now below the lows of 1970, the time of recession in the country Note: that this index indicates consumers’ economic expectations for the next 12 months.

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 the need be.

It became known earlier that PMI CIPS in the manufacturing sector of the UK was at the level of 49.0 points in August against the forecast of decline to 48.6 points and the level of 49.1 points in July.

Low interest in risk is unfavorable factor for the Pound; traders are not in a hurry to make purchases because of the obscure external prospects. It is obvious now that the GBP cannot expect support from anywhere until significant improvements will take place in the external background. Although technical rebound can become an exceptional option, however after that the pair will be on sale again.

A meeting of the Bank of England will be held tomorrow and it will be interesting to know regulator’s comments.