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GBP: British Pound began to recover on Wednesday

At the Forex currency market the British Pound rate strengthens on Wednesday after two days of severe sales.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and is moving along the signal line, not giving a clear signal. Stochastic oscillator is still giving a pair sell signal today, being in the neutral zone.

Forex recommendations: taking into account external background the pair can consolidate in the range. However, in case of breakdown at the level of 1.6190, bullish sentiment can intensify and buyers’ targets will become the levels of 1.6220 and 1.6250.

The situation in Great Britain remains unchanged today; no important data is going to be published.

The data on the public sector borrowing released yesterday inspired players, making it possible for the Pound to add about 20 pips, however it was not able to reverse general trend: the volume of net borrowing in Great Britain reduced to  STG5.252 billion in January against the level of -STG0.095 billion a year earlier. Statistics released earlier showed that index of houses prices Rightmove increased by 3.1% m/m (+0.3% y/y) in Great Britain. It is worth noting that different agencies, which monitor real estate market in the UK, use different indicators and as a result published data from time to time differs diametrically.

Meanwhile Friday’s statistics gave chance for the Pound to soar up: level of retail sales rose by 1.9% m/m (+5.3% y/y) in January against expectations of grow by 0.2% m/m; net mortgage lending in the UK remained  invariable in January, at the level of STG 1.2 billion.

The Bank of England believes that risks of inflations have shifted upward at the moment and forecast of economic growth appears weaker than in November. In addition there are also risks associated with the household expenditure and the recovery of British economy is unlikely to be smooth and soft.

The head of the Bank of England Mervyn King emphasized that he can see imbalance of economic system in the country and does not approve market’s expectations of the interest rate increase. He reiterated that the regulator has never reported on the increase of interest rates in advance. According to the representative of the MPC Mr. Sentence, inflation outlook, made public by the Bank of England, is overly optimistic. He believes that downside risks to inflation are underestimated in the report of the regulator and the rates should grow more actively. At the same time Sentence does not see any specific signs of the Pound.

 

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