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At the Forex currency market the British Pound Sterling rate declines on Monday morning; while external background is extremely negative.

Forex forecast: MACD indicator for the pair GBP/USD, remains in the positive area, however it is moving along the signal line, not giving a clear signal. Stochastic Oscillator is going down in the neutral zone, gliding to a sell signal.

Forex recommendations: in case of break down at the level of 1.6390, the pair will go to 1.6370 and 1.6350. If downward breakdown does not take place, the pair will consolidate at the current levels.

Tension at the market will be preserved at the beginning of the week; situation in the U.S. economy along with the spreading debt problems in Eurozone exert pressure on the consumer interests of investors.

Situation in the British economy has not changed much at the moment.
 
The meeting of the Bank of England was as usual brief and concise: the rate was left at the level of 0.50% per annum, package of public bonds redemption was also left unchanged, in the amount of 200 billion pounds.

No special comments have been made: British regulator continues to adhere to the old monetary policy.

According to Finance Minister Osborne, Great Britain continues to hold a status of a quiet habour, because national authorities are taking tough measures on fiscal policy. He believes that the country shall continue to adhere to consolidation plan to get rid of debts; meanwhile the Britain is able to keep away from recession. Rejection from the fiscal plan at the moment will become a real threat to economic growth, thinks Osborne. 

It also became known last week, that index of PMI CIPS in the UK construction sector increased to 53.6 points in July against the forecast of 53.0 points. In June, CPI in the UK fell by 0.1% m/m (4.2% y/y) against the forecast of growth by 0.2% m/m.

Earlier, Confederation of British Industry, CBI has reduced GDP forecast for the current year to 1.3% against the forecast of 1.7% in May. According to experts, sovereign crisis in Europe, debt problems in the U.S. and Japanese disasters will not enable British economy to strengthen considerably. Meanwhile, preliminary GDP in the UK increased by 0.2% on quarterly basis (+0.7% y/y) in Q2.

Moody’s believes that the UK DGP will rise by 1.6% this year; in 2012 – by 2.1%; while the growth in 2010 had been by 1.3%. At the same time unemployment rate will vary in the range of 7.8-8.0%. The forecast of the agency is based on the belief that the Bank of England will raise interest rate by 25 basis points before the end of this year and by another 1% -over the next year.

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