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At the Forex currency market the British Pound Sterling rate goes down slightly on Tuesday, since investors are shifting into the standby mode in advance of tomorrow’s summit in Europe.

Forex forecast: MACD indicator for the pair GBP/USD is growing in the negative area, shaping a buy signal. Stochastic Oscillator goes up in the neutral zone and is approaching overbought zone, giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5985, target for the purchase will be the levels of 1.5990 and 1.6000. There is high probability of the more significant correction downward.

According to Mr. Will a member of the Bank of England and MPC, British economy demonstrates slow growth rate and probable recession in Q4 would not become a great surprise.

Great Britain reiterates that Europe seriously impedes its progress. Last week, representative of the Bank of England Mr. Bean said that the Bank of England had been focused on medium- term inflation prospects at the moment. However, the country is still significantly affected by the developments in Eurozone. Recent data which showed the rise in inflation had been triggered by number of factors of temporary nature.

CPI in the UK rose by 0.6% m/m (+5.2% y/y) in September against the growth of 4.5% y/y in August. Obviously, inflationary pressure has soared upward, which affects economy. We would remind that in the outcome of the meeting in October, the Bank of England decided to leave interest rate unchanged at the level of 0.50% per annum, at the same time increasing volume of the assets repurchase program. Therefore, QE was increased to 275 billion pounds against the previous level of 200 billion pounds. In the follow-up comments the head of the Bank of England Mervin King said that the expansion of the assets repurchase program has been provoked by the slow growth of the global economy, however QE will have a positive impact on the British economy in the future. According to him these measures are preventive since Britain is in the middle of the drastic crisis now.

Earlier it became known that retail price index BRC in the UK increased by 0.2% m/m (+2.7% y/y) in September. Volume of retail sales BRC in the UK increased by 0.3 y/y in September. Thus, according to the survey of the British Consortium of Retailers volume of retail sales rose slightly on annual basis last month; however monthly dynamics is mixed. Prices for food continued to grow, demand for clothes and footwear fell despite the seasonality. Therefore, basic demand is minimal at the moment. The data released earlier showed that volume of production output in the UK increased by 0.2% m/m (-1.0% y/y) in August.

Meanwhile, market is very susceptible to risk; investors believe that European debt problems will be resolved any day now, and then financial world will again obtain some stability and prospects for recovery.

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