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GBP: British Pound determines further movement direction

At the Forex currency market the British Pound Sterling rate is traded close to the starting session levels on Monday, determining direction after the fall on Friday.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, continuing to go up, which confirms a previous buy signal for the pair. Stochastic Oscillator is giving an antipodal signal today, being in the neutral zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.5880 the pair will go to 1.5920 and 1.5980. If the level of 1.5830 is broken down, traders’ targets will become the levels of 1.5780 and 1.5740.

According to British Prime Minister Cameron, this year will be extremely difficult for the country’s economy. We would remind that as it became known on Friday consumer confidence in the UK fell to to -29 in January, as per GFK/NOP, against the previous level of -21. Thus, the index is at its lowest level since 1994, which indicates consumers’ skepticism regarding prospects of the economy in the nearest future.

In general economy in the UK remained almost unchanged.

Public sector is still in a difficult situation in spite the fact that the reduction program has not entered yet its active phase. As the data released earlier shows, needs of the government in funds increased to the level of 27.85 billion GBP in December, while revenue in the budget from tax for the specified period amounted only to 27.34 billion pounds. A week ago, representative of the Monetary Committee of the Bank of England Posen noted once again that the position of the regulator towards inflation has remained unchanged: The bank expects that inflationary pressure will reduce to the level of 2% soon and below, as fundamental factors, which take into account, for example, zero growth in base salary, give indications of this. We would remind that inflation in Great Britain amounted to 3.7% in December against the forecast of 3.4%.

Recall that  the minutes of the last meeting of the Bank of England was made public last week; 7 out of 9 members of MPC voted for the regulator’s decision to keep the rate at the level of 0.5% per annum, so the camp Sentence, which supports monetary policy tightening, was increased by one more vote, which was given by Vail. In addition Posen continues to vote for the volume increase of the assets redemption program. In general, the document stated that majority of the Bank members believe in the balanced risks; however, it is also not excluded that inflation will be higher than the forecast in the short term. Changes in the balance of power in the MPC in regard to the rate, completely fits our view, that current price of the Pound Sterling has already incorporated expectations of the monetary policy tightening.  

 
 

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