Forex forecast: MACD indicator for the pair GBP/USD is traded in the positive area; it started to descend moderately and is ready to shift to sideways movement, not giving a clear signal. Stochastic Oscillator remains in the oversold zone, maintaining a sell signal.
Forex recommendations: in case of break down at the level of 1.5790, target for the buying as part of rebound will be the levels of 1.5800 and 1.5820. If upward breakdown does not take place, the pair will descend again at around 1.5720.
It became known today that British prime-minister Cameron is going to Berlin to meet German Chancellor Angela Merkel to discuss how to maintain economic ties within Eurozone. According to him, there is high turbulence in the market now, while Europe is going through hard times. In the current situation the rise in the interest rate will be disastrous first of all for households and government’s sympathies are obviously not in favour of bankers.
In other respect there are no significant changes in the economy of Great Britain.
It became known today that consumer confidence index Nationwide in the UK declined to the record lows of 36 points in October against the forecast of 43 points. Consumer expectations fell to 48 points against previous level of 62 points. It is a negative signal because steady economic growth cannot be expected without revival of consumer sentiments. In addition, according to the data released yesterday the Bank of England has revised its inflationary expectations, as per the Bank estimates, in three years time CPI will be 1.5%, while volume QE will be STG275 billion and interest rate will be consistent with market expectations.
The head of the Bank of England Mervyn King immediately noted that economic situation in Britain remains complex and growth of industrial output shall be practically zero since mid-2012, although in the short-term it will be weaker than previously expected.
According to him, resources of monetary policy to stimulate economy are limited.
At the meeting which was held earlier, the Bank of England kept interest rate unchanged at the level of 0.50% per annum as expected. The rate of the Bank of England is at the current record-breaking low level since March 2009, largely due to the weak economic growth and rapid rise in inflation. Follow-up comments did not add anything new, the Bank of England remained loyal to the conservative policy and left previous size of QE in the amount of 275 billion pounds. It will take regulator another three months to finalize purchases as part of an additional package to QE and after that he can revert to revision of its volume. Nevertheless, Central Bank increased QE package only in October, therefore, it is hardly realistic to expect any serious monetary measures from British regulator.