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At the Forex currency market the British Pound Sterling rate is traded downward on Thursday, continuing yesterday’s sales; while external background remains moderately negative.

Forex forecast: MACD indicator for the pair GBP/USD started to descend in the positive area, giving a sell signal. Stochastic Oscillator is changing direction again in the neutral zone; now it goes downward, giving a similar signal.

Forex recommendations: in case of break down at the level of 1.5900, target for the sale will be the levels of 1.5890 and 1.5870. If downward breakdown does not take place, the pair will remain close to the current levels.

At the meeting which is going to take place today, the Bank of England is expected to keep interest rate unchanged at the level of 0.50% per annum. The follow-up comments of regulator about general economic situation and inflationary pressure may be of interest. 

The rate of the Bank of England is on the record-breaking low level currently since March 2009 largely due to the weak economic growth and strong rise in inflation.

Statistics released yesterday showed that index of retail price in the UK fell by 0.3% m/m (+2.1% y/y) in October. The data released earlier showed that the UK house price balance RICS fell by 24% in October against the forecast of -23%. Consumer confidence index Lloyds reduced to -72 points in October versus the level of -67 points a month earlier.  It is a negative signal reflecting among other things, negative impact of the European debt problems.

Meanwhile, Member of MPC Mr. Dale said earlier that he expects sharp decline in CPI at the beginning of 2012. According to Mr. Will, a representative of the Bank of England and MPC, British economy demonstrates slow growth rate and a chance of recession in Q4 would not be a great surprise. Representative of the Bank of England Mr. Bean has said earlier that growth rate of the British economy is slowing down in the second half of the year and he believes that real spending of the households will fall even more  significantly in the second half of the year. The head of the Bank of England, Mervyn King anticipates sharp fall in inflation in 2012. CPI in the UK rose by 0.6% m/m (+5.2% y/y) in September against the growth of 4.5% y/y in August. Obviously, inflationary pressure has soared upward, which creates new impediments to economy.

As it became known this week, Confederation of British Industry, CBI, has reduced the forecast for the UK GDP up to 0.9% this year, and up to 1.2% in 2012, noting that most likely British economy will remain unchanged this quarter.

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