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The British Pound Sterling is traded slightly upward, activity is sluggish at the Forex currency market in advance of the meeting of the Bank of England and possible decision to expand the volume of assets repurchasing program.

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 going up and is giving a buy signal. Stochastic Oscillator goes down a little, moving away from the overbought zone.

Forex recommendations: off the market.

Feasible event scenario at Forex: in case of breakdown at 1.5850, the pair will go to 1.5860 and 1.5890. A chance is high that the pair will consolidate at the current levels.

A regular meeting of the Bank of England will be held today, it is quite possible that comments of the MPC will be rather aggressive, as reaction to slowdown in British economy is definitely expected from the Bank. According to the head of the Bank of England Mr. King, decline in inflation assumes possibility of additional QE; however, rates will likely remain at the current levels. It is assumed that QE will be increased least by50 billion pounds.

King emphasized that recovery of the British economy will be slow and jerky. He also said that terms of lending are detrimental to economic recovery. At the same time the Bank of England is ready to provide liquidity to banks if a need will be.

We would remind that complex situation preserves in the labour sector. According to estimates, unemployment rate rose to 8.4% in November against the forecast of 8.3%, level of unemployed increased by 118 thousand over three months against +128 thousand in the previous three months. Situation is similar in the retail sector as well.

According to estimates of the National Institute of Economic Research NIESR, British economy will lose 0.1% this year; however in 2013 will resume its growth up to 2.3%. Situation with the households, that have a lot of debts and are not willing to spend money because of obscure economic outlooks, acts as a "hindrance" for the system. In addition, labor market also of importance, the Institute predicts that unemployment rate in 2012 will be over 9%. There is probability that inflation will drop to 2.2% from the current 4%, CPI can be at 1.4% in 2013.

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