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At the Forex currency market the British Pound Sterling rate continues to decline on Tuesday, keeping on the trend of yesterday.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and is growing, maintaining a pair buy signal. Stochastic Oscillator is going to come out of the overbought zone, starting a pair sell signal.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at the level of 1.6640 the pair will go to 1.6650 and 1.6670. If the level of 1.6620 is exceeded, the level of 1.6590 will become the target for decline.

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.

Current budget of the UK, excluding intervention in the financial sector, showed deficit in the amount of 10.442 billion pounds in March against 11.468 billion pounds a year earlier.

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.

Statistics released last week showed that GDP in the UK rose by 0.5% on quarterly basis (+1.8% y/y) in QI, which agreed with the forecast and was taken favourably by investors at Forex. 

It became known yesterday that level of prices for houses in the UK has not changed on monthly basis (-3.3% y/y) in April, as per Hometrack estimates. Minutes of the last meeting of the Bank of England released earlier showed that balance of power in the Monetary Committee remained unchanged: 6:3 and the regulator has no intention to start monetary tightening policy yet.

It is hardly probable that the rate will be raised before July-August this year.

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