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At the Forex currency market the British Pound Sterling remains in the focus of the sellers on Thursday as external background is still negative.

Forex forecast: MACD indicator is in the positive area for the pair GBP/USD and continues to go down, giving a pair sell any signal. Stochastic Oscillator remains in the neutral zone and is shaping a sell signal, approaching oversold zone.

Forex recommendations: in case of breakdown at the level of 1.6130, the target for purchase will be the levels of 1.6100 and 1.6080. If downward breakdown does not take place, the pair will consolidate close to the current levels.

Today, Finance Minister of Great Britain Mr. Osborne said that the country is on the track to recovery although monetary and credit side of the economy remains weak. According to him the British economy continues to struggle with difficulties, which will eventually lead to way out of the problems.
On Thursday investors’ attention will be focused on the data on the retail sales in the UK in May- if the upward trend of the indicator continues, it will help restrain the Pound from the further fall.

As reported in the edition of “Independence”, the Bank of England must be prepared to save national economy from the threat of double dip recession, and according to the comments of BDO representative the regulator has to leave interest rate at the current level of 0.50% per annum and stop using it as a shield against inflation.

Representative of MRS, Mr. Wheal, one of the remaining “hawks” in the Bank of England, stressed that the soonest rise in  the interest rate will reduce the need for its further raise, and it is necessary to increase the rate despite the fact that the level of inflation turned out to be below the forecast. According to him all conditions, required for the preventive measures of the Bank of England have been created, and the sooner the BoE launches tightening policy, the greater flexibility it will give to the regulator in the future.

The Bank of England believes that interest rate will reach the level of 0.75% by the end of this year; while by Q4 2012 it will be 1.75%, i.e. the Bank have made provisions for one rise in interest in 2011 and four in 2012. Inflationary prospects were described as “uncertain” and Central Bank admits that CPI will reach the level of 5% this year. Although the Bank of England expects that CPI will be slightly above 1.9% in two years time, Representative of the Bank of England Mr. Fisher noted earlier that bad state of economy could prompt the Central Bank to further policy easing. In addition, in case of unexpected economic downturn there is a chance that economic stimulation with the help of repurchasing of the securities from the market will continue. 

As it became known in the middle of the week, consumer confidence index Nationwide in Great Britain rose to 55 points in May against the forecast of 45 points, a maximum growth on monthly basis in 2005. Thus, royal wedding had a stimulating effect.
The data released earlier showed that CPI in Great Britain increased by 0.2% m/m (+4.5% y/y) in May, which agreed with the forecast. Inflation is still high, remaining at two-year highs, and continues to grow. 

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