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GBP: British Pound is being sold out on Tuesday
The British Pound Sterling rate is traded downward at the Forex currency market on Tuesday, amid moderately negative external factors.
Forex forecast: MACD indicator for the pair GBP/USD has broken through the signal line from bottom to top and came into the positive area; it is moving along the signal line now and is not giving a clears signal. Stochastic Oscillator goes down in the neutral zone and is prepared to go to oversold zone, giving a sell signal.
Forex recommendations: in case of breakdown at 1.5690, the pair GBP/USD will go to 1.5670 and 1.5650. Consolidation near current levels is possible.
Rating agency Moody's announced today that forecast of the UK rating was downgraded to "negative", however existing rating was left at the previous highest level of AAA.
The Pound became agitated from this news:rating agencies used to give Great Britain a wide berth. However, it is becoming more obvious now that even tough opposition to European problems will not be able to protect Britain from negative impact. According to the data released last week, output volume in construction sector fell by 0.5% on quarterly basis (+0.9% y/y) in December against preliminary growth expectations of 0.2%.
Authorities have already reacted to statistics and stated that the index is not the cause for revising GDP in the country. At the meeting last week the Bank of England increased asset repurchase program by 50 billion pounds, up to 325 billion pounds, as expected. Mr. Osborn stated commenting this decision that the increase of QE will help achieve inflation target (official target is 2% and it has not been changed for about two years.) According to Osborn, current monetary policy is still the primary instrument of influence on economic changes. Analysis of the Bank of England proved efficiency of QE.
According to MPC estimates, economic activity in the country went down slightly in Q4 2011, however recent studies showed a positive picture. MPC believe that volume of industrial output will gradually increase in 2012 and recovery in household income will help economic growth. Another important factor is reduction of CPI because it will boost demand. However, tough lending conditions and cost-saving measures can be an obstacle. Unemployment will restrain inflationary pressure. QE program is designed for 3 months.
