GBP: The British Pound starts an active correction

At the Forex currency market the British Pound Sterling rate resumes moving upward from a year lows on Monday morning – backed by today’s favorable conjuncture. Firstly – attractive levels, secondly – rather calm external background. At the same time one should note that fundamentally the British Pound is still weak.

Forex forecast: MACD indicator for the pair GBP/USD continues to go down in the negative area, giving a sell signal; volumes are increasing. Stochastic Oscillator stays left the oversold zone, and is steadily rising in the neutral zone, giving a buy signal.

Forex recommendations: in case of breakup at the level of 1.5580, sales target will be the levels of 1.5590 and 1.5630. If breakup does not take place, the pair will consolidate close to the current levels.

The British Pound’s year lows did good to the currency – amid rather stable external background investors gained interest in GBP. Still it’s too early to talk of the about-turn.

According to the statistics mortgages are reviving in Great Britain: BBA Mortgage Approvals reached 35,226 k in August against the forecast of 33,250 k. The indicator jumped to 2010 highs. One should note that refinancing approvals totaled 27,114 k against 26,229 k before.

In this case the earlier data doesn’t seem strange: house prices Rightmove increased by 0.7% m/m in September. The data on the real estate sector from other leading agencies will be known soon, which will provide a clearer outlook. Meanwhile, we can see the lack of offers as it emphasized by Rithmove and upward pressure from the very low interest rates, which encourage the growth of the house prices; plus to this low level of public confidence to economy and reluctance of people to spend money, caused by obscure economic prospects. 

Minutes of the last meeting of the bank of England which was made public at the end of the previous week, took market by surprise: all 9 members of the Monetary Committee voted to maintain interest rate at the low levels. Nevertheless, MPC started to contemplate seriously about expanding of the QE program.

It became known earlier that retail sales in the UK fell by 0.2% m/m, in August; the index has not changed on annual basis. In addition, Mr. Cable said that program QE will enable economy to regain both consumer and business confidence if they press ahead with a program in the same volumes. The data released earlier was interesting: index of retail sales in the UK amounted to +0.6% m/m (+5.2% y/y), which agreed with expectations. In addition, consumer price index CPI rose by 0.6% m/m (+4.5% y/y) in August against the forecast of growth by 0.6% m/m.