Daily Forex Reviews

GBP: British Pound tends rise

The British Pound Sterling rate is traded upward at the Forexcurrency market on Wednesday, on the last winter day.  Forex forecast: MACD indicator for the pair GBP/USD remains in the positive area, it has shifted to sideways movement, and is not giving a clear signal. Stochastic Oscillator goes up inthe neutral zone and is giving a buy signal.

Forex recommendations: in case of breakdown at 1.5940 the pair GBP/USD will go to 1.5950 and 1.5970.

Statistics released this morning showed that consumer sentiment index GFK/NOP in the UK was at the level of -29 points. House prices Hometrack have not changed on monthly basis in February(-1.4% y/y). The Pound has ignored this statistics.

According to the representative of the bank of England Mr. Tucker, as soon as recovery rate in the local economy stabilize, stimulus can be abandoned. At the same time, on-going stimulation activity can be continued only in case of thorough monitoring of inflation.

According to him, presently,imbalance in macro-economic policies can cause risks. Monetary policy should support domestic demand in the country.

We would remind that at theregular meeting in February the Bank of England increased asset repurchase program by 50 billion pounds, to the level of 325 billion pounds, as expected.Mr. Osborn stated commenting this decision that the increase of QE will help achieve inflation target (official target is 2% and it has not been changed forabout two years.) According to Osborn, current monetary policy is still theprimary instrument of influence on economic changes. Analysis of the Bank ofEngland proved efficiency of QE. Representative of the Bank of England Mr. Beansaid earlier that economic growth should accelerate in the second half of theyear and the rate of inflation will slowdown; while in the first 6 months ofthe year economic growth is slow. In general, Mr. Bean thinks that economicgrowth will recover gradually and will be moderate. Minutes of the last meetingof the Bank of England showed a split of opinions in the Monetary Committee.Two of its members, Posen and Miles voted for expansion of the assetsrepurchase program for 75 billion pounds, while other seven monetary politicians were for expansion of the volume of QE for 50 billion. All members of MPC were unanimous in regards to interest rate. As a result, "hawks"are back again in the "dove-like" MPC.