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At the Forex currency market the British Pound tries to grow on Friday after three days of massive sales.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD, however it started to decline; trading volumes are also reducing, which is an indication of a pair sell signal. Stochastic oscillator has come in the oversold zone, maintaining a pair sell signal.

Forex recommendations: upward correction can lead the pair to 1.6450. However, when “bears” are back, the target of sale will be the levels of 1.6380 ? 1.6350.

At the meeting yesterday the Bank of England decided to leave interest rate unchanged at the level of 0.50% per annum, volume of assets purchase was also kept  unchanged- at the level of stg200 billion. Comments of the regulator did not contain any new development, and this seems natural; the situation in the British economy is far from being stable.

Deloitte & Touche LLP believes that the Bank of England will not raise rates until 2013 – according to observers, economic growth in the country is still poor, basic economic trend in the UK is also not too good, which encourages to leave rates at the current level at least until the end of this year and throughout the next year as well. Inflation in the country is twice as high as 2% projected by MPC. Deloitte & Touche LLP indicates that British GDP will amount to 1.5% in 2011, the same as next year; while inflation will reach 4.5% in 2011 and 1.8% in 2012.

According to the rating agency S&P the rise in the interest rate can be expected in the next three months. “It is caused by the fact that inflation level will to rise again after the decline in March and it can reach the level of 5% in QIII.” –stated lead economist of the agency J-M Six..  

The head of the Bank of England Mervyn King believes that the rise in the interest rate can exacerbate problems of national debts. Such statement can be well regarded as support to “dovish” sentiments in the Monetary Committee.

The data released last week showed that consumer confidence in Great Britain increased to 44 points in March, as per Nationwide study, against the level of 39 points in February. At the same time index of expenditure rose to 66 points versus the previous level of 53; expectation index went up to 66 points against the 51 previously. Therefore, confidence index in the UK has moved away from the lows, which is a positive factor for the British economy. The data released today showed that CPI in Great Britain grew by 0.3% m/m (+4.0% y/y) in March.  Sterling sluggishly responded to this statistics – for over a year inflation in the UK has been considerably higher than the significant level of 2% to which the Bank of England adheres.

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